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Prices of detached homes in Vancouver fell 8.5% in November from a year earlier, the biggest drop since the end of 2009, according to data released by the Greater Vancouver Real Estate Board (REBGV), which may be far from over.
The main property markets in Vancouver and Toronto, which are already struggling, may be further cooled by a diplomatic dispute between China and Canada after the arrest of Huawei executives.
Prices of detached homes in Vancouver fell 8.5% in November from a year earlier, the biggest drop since the end of 2009, according to data released by the Greater Vancouver Real Estate Board (REBGV), which may be far from over.
China’s top real estate agents have cancelled some Canadian real estate investment promotions and some sensitive investors have abandoned their purchase plans, according to industry sources.
Canada’s detention of Ms. Meng Wanzhou, Huawei’s chief financial officer, has sparked a diplomatic dispute between the two countries. Tensions could lead Chinese real estate investors to abandon Canada’s main real estate markets, such as Vancouver, housing agents said on Sunday.
The head of the Canadian branch of a top Chinese real estate agency told the Global Times that the company would not disclose that the agency had cancelled some Canadian promotions. and encourage potential new Chinese investors to start shifting their immigration destinations or postponing their investment plans.
“some sensitive investors have abandoned their plans, about 10 per cent of them,” said brokers in Beijing. Some investors are postponing their plans as a temporary event. ”
A 28-year-old Chinese surnamed Lu, who studied and lived in Montreal for eight years, said she was reconsidering her plan to buy a house after the detention.
“I have arranged time to submit my immigration application, but I want to postpone the application and my plan to buy a house in Canada because I am disappointed with the Canadian government,” Lu said. I don’t understand why Canadian officials interfere in the political affairs between China and the United States. ”
According to Evan Tang, a real estate agent in Toronto, the anger has spread among the Chinese community in Canada, where people have lost confidence in the economic policies of Prime Minister Justin Trudeau’s government.
“as December is usually the off-season for the Canadian real estate market, dealers and potential buyers are usually on vacation, we haven’t felt a major change yet,” Tang said.
In recent decades, Chinese investors have been seen as the main force driving up prices in the Canadian real estate market. But house prices have been adjusted as a result of the foreign buyer tax introduced in British Columbia in 2016.
Home sales in greater Vancouver fell 42.5% in November compared with the same period last year, according to the local real estate board.
China’s enthusiasm for Canadian real estate investment has cooled after the Canadian government tightened immigration policy and imposed a 15% to 20% property tax on foreign buyers, according to the chief executive of an immigration company.
The Canadian government’s detention of Meng has damaged its own image, which will further reduce its attractiveness in terms of investment.
Industry insiders point out that a slowdown in the Canadian real estate market, which accounts for 7.6 per cent of GDP, could put pressure on the country’s economy, according to a report by Moody’s.
For example, unlike the larger Chinese developers, the Canadian property market is characterized by smaller and fragmented local developers who are more vulnerable to the recession.
If house prices stop soaring, developers will face a slow return on capital and difficulty borrowing from financial institutions. The actions of the government have always been paid by the public.