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In March, Canadian house prices exceeded C $500000 (US $380000) per house, 40 per cent higher than in the US over the same period. In addition to local demand, overseas buyers, including the Chinese, are also pushing up. According to the 21st Century Economic report and related reports, Chinese buyers invested hundreds of billions of yuan a year in the Canadian property market between 2014 and 2015.
Spurred by low interest rates and a hot housing market, Canada’s personal debt ratio has risen rapidly, surpassing the level seen in the US before the 2008 financial crisis. People from all walks of life have warned that once interest rates are raised, the housing bubble will burst. But at the same time, due to the lack of other bright spots in the economy, it is difficult for the Canadian government to “operate” on the property market.
At present, the Canadian government has begun to investigate the purchase of houses by foreigners, and an increase in interest rates is still under discussion.
The Canadian Mortgage and Housing Corporation told the 21st Century Business Herald that it is investigating how many new homes in Vancouver, Toronto and Montreal have been sold to foreigners and is expected to get preliminary results in November. In addition, the government has also conducted consultations on foreign buyers with developers, data providers, industry associations, intermediaries and lawyers in the three regions, which are currently in the final stage.
Since around 2006, Canadian house prices have rapidly overtaken those of the United States in a short period of ten years. Sal Guatieri, a senior economist at the Bank of Montreal of Canada (BMO), pointed out in a report earlier this month that recently, for the first time in history, average property prices in Canada exceeded C $500000 per house, or about $380000, compared with an average price of about $270000 in the United States in March.
House prices in Canada hit another record high in April, according to data released by the Canadian Real Estate Association (CREA). The average price increased by 13.1% over the same period last year, especially in Vancouver and Toronto, where house prices have risen for months in a row. But excluding the two cities, average property prices across Canada still rose 8.7% in April from a year earlier. The data also show that house prices in Greater Vancouver and Greater Toronto rose 25.3% in April and 12.6% in Greater Toronto compared with April last year.
Insiders at RE/MAX, Canada’s largest real estate brokerage market share, told the 21st Century Business Herald that the company conservatively estimated that Chinese buyers’ transactions in Canada reached $15 billion in 2014 (more than 90 billion yuan at exchange rates) and more in 2015. Chinese buyers invested 12.7 billion Canadian dollars (64 billion yuan) in the Vancouver property market in 2015, accounting for 33 percent of the city’s total, according to Peter Routledge, an economist at the National Bank of Canada. He estimates that in Toronto, the figure is 9 billion Canadian dollars (45.4 billion yuan), accounting for 14% of total sales.
The Canadian Mortgage and Housing Corporation, the official agency, told the 21st Century Business Herald that it is conducting a survey on foreign home purchases, including an investigation into how many new homes have been sold to foreigners in Vancouver, Toronto and Montreal.
