The heavy exodus of the Chinese renminbi from mainland China put pressure on the country’s economy. In an effort to stymie the outflow, the Peoples Bank of China (PBOC) enacted new rules that are meant to help it exert more control over its currency…and that could spell trouble for the Canadian real estate market!
A CANADIAN REAL ESTATE “BUBBLE”
Back in August we noted that the Vancouver housing market was doomed after the implementation of a 15% property tax on foreign buyers targeting the massive influx of Chinese money driving real estate prices to astronomical levels. Sure enough, within a matter of weeks home prices had plunged and so had the volume of residential real estate transactions (see "As The Vancouver Housing Market Implodes, The "Smart Money" Is Rushing To Get Out Now").
On January 29th, 2016, Vancouver went crazy.
The story of a humble 86-year-old home in Vancouver’s Point Grey neighbourhood was widely circulated by national media outlets and became a lightning rod for local frustration with skyrocketing property values.
The “knockdown”, with its rotting walls and $2.4 million asking price, perfectly underscored how crazy the region’s overheated housing market had gotten.
A month later, the house was sold for $80,000 above its asking price, rekindling public outrage.
With regulators and local authorities unable or unwilling to crack down on the unprecedented housing bubble in select Canadian cities, increasingly used by Chinese oligarchs to park hot cash offshore, the local banks are starting to take action into their own hands. Case in point, Bank of Nova Scotia has decided to ease off on mortgage lending in Vancouver and Toronto due to soaring prices, Chief Executive Officer Brian Porter said.
Everybody loves a good Vancouver real estate horror story. Here is a great one.