The Chinese investment in Canadian real estate has often raised eyebrows amongst realtors and investors since they stormed the market a few years ago. Judging by the current conditions in the Canadian market, Chinese investors are scared that investing now might be unideal.
Our housing experts will provide you a broader perspective about the current Chinese investment in the Canadian housing market.
Influx of Chinese Investment In Canadian Real Estate
It appears as if Chinese investment in the Canadian housing market started just yesterday. However, Chinese investment in the housing market started over a decade ago. We can attest these huge Chinese investments partly to the China-Canada diplomatic relations.
It was not surprising that Chinese nationals became interested in investing in the market, considering that the Canadian real estate market offered something other real estate markets in North America didn’t provide – affordability and less strict laws.
Over the last decade, Chinese investment in the Canadian housing market has been growing because Canada positioned itself as an immigration hotspot. When you add that to the employment opportunities and low-interest rates, you will understand why the real estate business is thriving in that location.
The lockdown might have slowed down the market last year, but sales have started to plummet in 2021.
Chinese Interest In Top Canadian Cities
Canadian cities like Toronto, Vancouver, Ottawa, Calgary, and Montreal witnessed rapid growth in the real estate niche due to the high Chinese investments. Although the political tension between the diplomatic countries in recent years somewhat affected the housing market in Metro Vancouver, the populated city is still a desirable place of investment for Chinese buyers.
More than 500,000 Chinese people now reside in the vibrant city.
According to these Chinese buyers, the reason for choosing Canada is because of the country’s quality of life, an all-inclusive attitude toward foreigners, and top-notch education.
According to Juwai, data shows that Chinese buyers’ buying inquiries increased 32% between Q1 and Q2 2020, citing use, investment, and education as the sole purpose. You should know that there are over 140,000 Chinese students in the North American nation.
Another reason for Chinese investment in Canada’s top cities is because of the stability in their house markets. The Chinese real estate market is relatively unpredictable, susceptible to declines, and dictated by tight regulations. Additionally, you don’t own property in China because the government has full ownership of the lands.
With Canada’s stable house market and limited regulations, Chinese investors decided to swoop into the market, making purchases and selling for profit. Chinese companies were also not left out, as they chose to take advantage of the Canadian housing market.
Effect on Canadian Real Estate
The influx of foreign investment from Chinese nationals is often blamed as the primary reason for Canada’s abnormal high housing prices . According to the National Bank of Canada, Chinese investments amounted to over $12.7 billion in 2015. But, should you blame Chinese investors for the sharp incline of house prices?
Our team believes Chinese investors are unfairly blamed. Other factors are also responsible for the growth, such as population increase and incredibly low-interest rates.
15% Tax for Foreign Buyers
Apart from the political tension, another factor that might affect Chinese investment in Canadian real estate is the foreign buyer tax. The recently introduced tax rule stipulates that Chinese nationals with investments in the real estate niche must remit 15% tax on their properties. This is by no means significant, considering the lucrativeness of the market, but some investors may be upset and focus their attention somewhere else.
Why are Chinese buying Canadian real estate?
Chinese are buying Canadian real estate because the real estate market in Canada offers an appealing and more affordable investment opportunity to foreign investors. In addition to that, the Canadian real estate market is more stable, and the money invested is secure.
Are the Chinese still buying real estate in Canada?
Yes, the Chinese are still buying real estate in Canada, although the buying rate has declined. Canada is the fifth most-enquired country by Chinese nationals, meaning they find the real estate investment in the country appealing, although Chinese nationals made fewer buyer inquiries in 2020 than 2019.
If you are wondering if you can still invest in the Canadian real estate market as Chinese, the answer is yes. Despite the new tax rules, Covid-19, and straining political tension between the two countries, Chinese investment in Canadian real estate will not stop. Chinese investors still consider Canada as their favorite destination for investment, migration, and education.