Market not very sexy' except in 'micromarkets' favoured by Chinese
The story of 2012 in real-estate-mad Vancouver could be a "not very sexy" chapter or another surge of cash transactions in the "micromarkets" favoured by Chinese investors.
Julia Lau, Chinese real-estate specialist at Sotheby's International Realty Canada, believes sales are about to spike in certain neighbourhoods in conjunction with the three-week holiday associated with Chinese New Year.
Lau's clients are wealthy Chinese business-men who set their families up in tony areas of Vancouver and West Vancouver that offer multimillion-dollar homes with top schools. These investors like to buy Vancouver property while visiting the wife and kids at this time of year, Lau said.
In the first few months of 2011, stunning growth in sales and double-digit price gains in Vancouver's Westside, West Van and Richmond skewed regional prices to a peak in June. The gains have started to fade, according to the Canadian Real Estate Association, with sales slowing in December, and Vancouver's price average dropping two per cent to $734,766.
The "earlier troubling surge in prices in Vancouver is so far unwinding in an orderly fashion," the Royal Bank of Canada said this week.
While local buyers might worry that home values could be dampened if Canada's historically low interest rates eventually rise, that's not a concern for Lau's clients.
"In Chinese culture we buy one home for living in and a few for investments," Lau said. "Most of my clients buy in cash, so they don't need the bank. They would not be forced to sell [due to changing financing conditions.]"
Lau predicts that during the Chinese investor season from January to May this year, she will sell 10 luxury homes per month, a little slower than last year's frenetic sales pace.
Cameron Muir, chief economist of the B.C. Real Estate Association, said it's too early to judge if the red-hot "micromarkets" favoured by Chinese investors will surge again, but overall, Vancouver's price action will be much less titillating.
"The market is not very sexy - it is stable and normalizing," Muir said. "Last year's pricing was quite an anomaly in Vancouver where prices were skewed quite dramatically in the first few months."
Muir said it's difficult to predict how China's falling housing market will translate to Vancouver real-estate sales. Lau said efforts to restrict multiple-home purchases in China are pushing investors into purchases abroad, and that Vancouver's values look attractive com-pared with Beijing and Shanghai.
In December 2010, real-estate prices in 70 Chinese cities in a government survey had risen for 19 straight months, with scorching yearly gains of about 30 per cent in Beijing and Shanghai.
But in December 2011, according to the Wall Street Journal, property prices in the 70 Chinese cities fell for the third straight month, amid efforts by Chinese officials to cool the property market.