It was interesting to hear Donald Trump, the billionaire real estate developer who wants to be president of the United States, talking about how many high-end New York properties he’s sold to buyers from China.
“They buy my apartments,” Trump told the usual rapturous crowd during a campaign speech last week.
“Fifty million. Forty million. Thirty million,” he boasted. “Fifteen million — they’re the cheap ones. I don’t have to worry about the rent, believe me.”
It’s often difficult to take The Donald seriously, but when it comes to the global power and reach of Chinese capital, his bragging rings true.
And now new indicators show Chinese millionaires are snapping up luxury properties in Vancouver with similar gusto.
A report from the B.C. company Macdonald Realty Ltd. said buyers from mainland China account for an amazing 70 per cent of the company’s sales of Vancouver homes priced over $3 million.
The same report showed Chinese buyers bought progressively fewer lower-priced properties — just 11 per cent, for example, of homes under $1 million.
So, does that mean offshore buyers are only driving up the prices of Vancouver mansions and penthouse suites? Must there be another explanation for soaring across-the-board prices throughout the region?
Not according to University of B.C. professor David Ley, who says the massive upward pressure on high-end home prices can inflate prices everywhere.
“The people who sell these homes, they have got a very substantial income stream now for them to buy someplace else. People typically move out to the suburbs. They carry that equity with them and affect that market.
“Then there are people who are frustrated buyers, who are not able to buy, let’s say, in Vancouver because of the prices. Their demand is displaced to slightly cheaper areas and the prices go up there as well.”
Ley digs deeper into the mindset of Metro Vancouver home sellers, who have become caught up in the frenzy of record-setting prices.
“If you are a seller, and you see prices rising in West Vancouver, you are going to have more ambition for a sale you’re making in North Vancouver,” Ley said.
“The psychology of rising expectations also leads to prices rising throughout a metropolitan area.”
Like Donald Trump’s New York, Vancouver is a “gateway city, closely tied to the global circuits of immigration and capital flow,” Ley said.
Prime Minister Stephen Harper promised last week to start collecting real estate purchase data and to take unspecified action if the data shows foreign speculators are inflating home prices beyond the reach of Canadians.
It’s something Harper could have done years ago, of course. But the issue now becomes a strong talking point for all parties in the federal election.
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