The conflict of the residents of Hong Kong with the government of China went on for months. It is becoming increasingly difficult to find a way of compromise between the ruling party of China and the protestors, with the rise in anti-government demonstrations in Hong Kong. The adverse effect to this situation is that more Chinese immigrants and other affluent people relocated to Canada which in turn, put the real estate markets in Toronto and Vancouver under more pressure. As the situation in Hong Kong deteriorates, more and more immigrants from Hong Kong seem determined to invest their money in Canada and are found touring Toronto or Vancouver in search of homes.
During the past couple of months, the interest of the Chinese citizens seems to have increased abruptly. Canada is already a very common and stereotyped destination for Chinese residents with over 500,000 ethnic Chinese residing in Vancouver alone. In comparison, 300,000 residents of Canada live in Hong Kong. According to reports, Vancouver, has been announced as the weakest luxury housing market in the world for the past year. In the previous year, there has been a decline in the luxury prices by 13.6 per cent. This reduction has been caused by the tax of 20 per cent foreign buyers of the city in association with 1 per cent empty homes of the city.
Market trends that have been observed
The decline in business has influenced the luxury market the most. A rapid rise might be noticed in the luxury market very soon and in the upcoming couple of months, it is probably going to be evident where the prices go.
There had been a decline in the overall standard price of all types of property in Vancouver in July. The prices decreased to $998,700 which is 9.6 per cent lower than that of June 2018. It was also the first time since May 2017 that the prices had dropped below $1 million. There has also been an increased appearance of Hong Kong buyers at showings and open houses.
Either there will be a mass departure of residents as a result of this conflict or people may take more time to make such long term plans and move out slowly over the next 20 years. What will happen is still highly debatable.
Why investments are flowing in
One Hong Kong dollar is equal to 17 Canadian cents. Therefore, to a Hong Kong buyer, the cost of a $3 million home in Vancouver would be a little less than 18 million Hong Kong dollars as of August 23. This is much less in comparison to $19.5 million Hong Kong dollar that was the price of the aforementioned house a year ago. The foreign buyers’ tax would be easily covered by the favorable exchange rate in association with the lower benchmark prices. The decisions of the global market are always dominating, but global events affect Vancouver much more than other parts in Canada.
The evidences of the turmoil between mainland China and Hong Kong can also be seen in the streets of Canada. In the recent past, there have been many conflicts and confrontations between the supporters of pro democracy Hong Kong and China in Vancouver. People who do not belong to the Chinese community or are not well aware of it, do not perceive the extent to which the Chinese community has always been fractured, predominantly along geopolitical and class lines.
An upturn in foreign interest is also witnessed in Toronto as the marketing agencies are concentrating on the buyers of Hong Kong. There is also a high possibility that the real estate markets of Montreal and Ottawa would be hugely profited by the large scale relocation of Hong Kong citizens as foreign buyers’ tax is not applicable in either of the two cities.