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West Coast Wonder

12.06.20

Explorable neighbourhoods, memorable cultural and outdoor activities framed by striking natural vistas – there's a superfluity of reasons to fall for the ocean-fringed metropolis of Vancouver, and property choice is no exception, as James Matthews discovers

Intro about Harry and Meghan…

Vancouver easily earns its reputation as one of the world’s most beautiful cities, surrounded by the sea and hugged by soaring mountains – reflected in seemingly endless gleaming glass skyscrapers. But it’s not just good looks that make Vancouver worth a second glance. Add in a comprehensive cultural landscape of galleries, museums and theatre, and a shopper’s paradise of big-name designers and emerging talent, and you see why there’s plenty to explore beyond the skyline.

A relatively modern city: it was incorporated in 1886 - the city faces the Pacific Ocean with the mountains for hiking or skiing at its back and is regularly placed in the top ten most liveable places in the world.

Like many cities around the world, Vancouver is grappling with changing housing costs that have pushed out large swathes of residents. Part of the reason is the attraction of Vancouver itself, and not just among Canadians. Between its natural beauty, its temperate climate and Canada’s liberal immigration policies, the city has become a magnet for foreign buyers, especially from China.

Chinese immigration has always been a defining social, cultural and economic force in Vancouver – and Vancouverites know what the wrong side of history looks like. Railway workers from southern China began arriving as early as the 19th century, and at the beginning of the 20th century Vancouver was the stage for some of Canada’s ugliest episodes of racism: anti-Chinese riots, a “head tax” on ethnic Chinese, and later an outright ban on Chinese immigration.

As the city grew into a mecca of left-wing politics and hippie self-expression in the 1960s and 70s, the ideals of tolerance and inclusion became central to the central to the civic self-image. Today, more than 30% of residents claim Chinese ancestry and the city is, by the standards of most western countries, remarkably easygoing – though this ideal of harmony never quite squared with immigrants’ own experiences. Fong notes the pressure her parents’ generation felt – and still feels – to assimilate. “When we were growing up, they encouraged us to speak English at home instead of Chinese,” she says.

The lessons of the past go some way to explaining Vancouver’s almost religious embrace of multiculturalism, says David Ley, a UBC geography professor and wealth migration expert. “I think it’s very much part of the Canadian psyche to want to avoid these discussions,” he says. “We’re a polite and tolerant society that has been thoroughly schooled in the virtues of multiculturalism.”

Many places, in both Canada and the United States, have tried remedies to the squeeze: tenant protections, housing subsidies and steps to enable developers to build higher and faster so that more housing will come online. But few have gone as far as British Columbia.

Last year, in a provincial election almost entirely about housing costs, citizens voted out the center-right B.C. Liberal Party, which had run British Columbia for 16 years, and brought in a government led by the left-of-center B.C. New Democratic Party. Since then, the New Democrats have not only tried to increase the housing supply, but have also proposed a slew of measures that aim to curb housing demand and chase away overseas buyers.

The New Democrats raised British Columbia’s foreign-buyer tax to 20 of a home’s purchase price, from 15 percent. In addition, the party plans to impose higher property taxes on second homes, on families whose primary breadwinner’s earnings come from money abroad and on homes valued at more than 3 million Canadian dollars ($2.3 million). Vancouver has passed a number of local measures, including a tax on empty homes.

“There’s no question that many of the measures we are bringing in are bold, but we felt they were critical if we were really going to address this crisis,” Carole James, British Columbia’s finance minister, said in an interview.

This would seem politically perilous. Two-thirds of Canadians own their homes, roughly the same share as in the United States. And Canadians, like Americans, expect to make money from the investment. Yet a number of polls, and interviews with homeowners like Mr. Welsh, suggest that Vancouverites are so shocked at the price levels that even homeowners want the market to cool.

In 2016, the nonprofit Angus Reid Institute in Vancouver found that roughly two-thirds of residents in the metropolitan area wanted home prices to fall, including half of homeowners. More startling was that one in five homeowners in the survey expressed a desire to see home prices fall by 30 percent or more.

“Unbeknownst to many people in the local population, Vancouver has been sold as a subsidised resort town and retirement community to the world,” said Josh Gordon, a political science professor at Simon Fraser University here. “We are now seeing the culmination of that dynamic.”

Vancouver, surrounded by snow-capped mountains and wide maritime views, has never been especially cheap. But home and condominium prices are up by close to 16% over the past year, and about 60% over the past three, according to the Real Estate Board of Greater Vancouver

What makes these gains so remarkable is that unlike Silicon Valley, London or New York — where the presence of high-paying tech and finance jobs helps explain housing costs — Vancouver has relatively low salaries. As part of their bid for Amazon’s second headquarters, Vancouver officials boasted about having “the lowest wages of all North American tech hubs.”

It’s nigh impossible to think about buying in Vancouver as a foreigner without considering the now- infamous tax on foreign buyers and speculators introduced in 2016 to make housing in the region more affordable and cool down an extremely hot market.

In Vancouver, foreigners pay a 20% tax on top of the purchase price. The tax was introduced because of the perception that Vancouver, the most expensive market in Canada, was becoming a parking ground for global capital.

Now approaching the end of the second year, many say the tax has not had its intended effect. Jerry Wang, of MacDonald Realty, a luxury brokerage in Vancouver, said that although the tax slowed the market at the beginning, foreign buyers are back in the game.

The largest island offers proximity to a 180-mile long For the luxury “Buyers can get a mortgage fairly easily, and relatively speaking, the price point for the Vancouver area is still very reasonable,” Mr. Wang said, compared to other large cities around the world.

He said his clients have just shifted to a slightly lower price bracket to account for the tax, and are still “buying at a discount.” They also still buy at the high end. “This year we have seen so many properties over C$10 million (US$7.7 million) sold in Vancouver,” he said. “Most of them are to Chinese families still wanting to be here.”

Because of the tax, he added, it is “properties in the middle that are suffering,” referring to those in the “affordable luxury” range.

How much of the city’s housing demand is coming from China is also hotly debated. Government statistics show that foreign buyers own about 5% of the housing stock in the metropolitan area, but the numbers are several times as high for new condominiums, which helps to explain why a surge of building hasn’t done much to reduce prices, according to an analysis by Mr. Yan. And this almost certainly underestimates the influence of foreign capital, since the data exclude Canadian immigrants with money from overseas.

The real estate industry contends that the issue is not an influx of Chinese, who have been coming to Vancouver for decades, but zoning restrictions that prioritise low-density living, outside of a few high-rise areas.

Figures show, however, that unlike other expensive West Coast cities like San Francisco, where the housing supply has long lagged behind population growth, Vancouver has consistently produced new housing. Over the past decade, the housing stock has grown by about 12%, while the population has grown by about 9%, according to the city.

This disparity has persuaded the city to broaden its measures beyond just a push for new buildings to efforts like the empty homes tax.

LONDON STANDARD - Established prime markets in Vancouver include Vancouver West and West Vancouver, confusingly two different areas of the city.

Downtown and especially Yaletown and West End are popular for their convenience and vibrant lifestyle while Kitsalano on the west of the city is a firm favourite with families and younger residents for its proximity to great beaches (Kits and Jericho) and its on-trend yoga studios and juice bars.getting a

Vancouver’s meteoric property price rises were fuelled by Chinese buyers eager to get a foothold in the market.

If Meghan and Harry choose to base themselves in British Columbia and purchase a home there they could be subject to two separate property taxes introduced as a result of the dramatic increase in international demand for homes in Vancouver.

The Speculation and Vacancy Tax is an annual tax aimed at “turning empty houses into homes for local residents and ensure foreign owners contribute fairly to the local tax system” according to the British Columbia government.

The tax applies to homes throughout British Columbia that are empty for more than 180 days a year with certain exemptions for principal residences.

For 2020 the tax is set at 0.5 per cent of a property’s assessed value for Canadian residents and 2 per cent for foreign owners. The $115 million this tax is expected to raise annually will be used to help fund affordable housing projects.

Additional Property Transfer Tax for Foreign Entities applies within specified areas of British Columbia to foreign buyers.

Since 2018 within the Greater Vancouver area this tax has been set at 20 per cent of the property’s value.

The latest figures from BC Assessment report the typical value of a family home in Vancouver dropped 11 per cent in the past year, yet are still around £910,000 (CAD$1.570,000).

Apartment prices also fell, by seven per cent, to an average of £397,500 (CAD$686,000).

Burnaby, Coquitlam and Richmond were the top destinations for foreigners buying property in the first half of 2018, with three per cent of transactions in Burnaby and two per cent in each of the other two municipalities involving foreign nationals. The sole municipality to see an increase in the proportion of foreign nationals making purchases was the City of North Vancouver, where foreign buyers were involved in one per cent of deals in the first six months of 2018.

Vancouver's globalised housing market. Many Vancouver developers – and developers in other gateway cities – are selling units overseas, including units in projects that are mid-market in their pricing. Sales and marketing company SQFT Global Properties, specialists in overseas property marketing in the Asia-Pacific, shows nine Vancouver projects on its website. Onni Group's the Mark is one of them, with prices starting at $299,900. The remaining eight are Westbank projects that are mid-range to expensive on the price spectrum, including Horseshoe Bay, Joyce, Alberni by Kengo Kuma, 188 Keefer, Vancouver House, Kensington Gardens and Granville at 70th.

According to a recent report by Hong Kong-based international real estate marketers Juwai.com, 19% of Chinese buyers surveyed had plans to purchase property in Australia this year. 26% were going to look at U.S. properties and 14% of buyers had plans to purchase in Canada. The top Canadian cities for investment are Toronto, Montreal, Vancouver, Ottawa and Calgary, in that order, Juwai.com chief executive Carrie Law said.

Much will depend on what the investor is looking for in a foreign property investment. This could range from a potential long-term retirement property, a place for offspring to live in while they study at a foreign university or a place to park their capital for short-term speculation.

"If it is capital for short-term speculation that the investors are looking for, then yes, Vancouver might be more appealing than Sydney when you have the option of shopping around at a real estate fair in Singapore."

Many argue the new city policy to prioritise locals at the start of a presales launch won't return the housing stock to local income-earners because it's a question of money earned elsewhere. The percentage of homes in the new buildings that are purchased with foreign money is, of course, an unknown. But the source of the money is, to Mr. Robinson, the crux of the problem. People working at local jobs can’t compete.

Buyers tend to go online initially “to get a feel for the market,” said Ruth Hanson, a broker with Sotheby’s International Realty Canada. She said many buyers meet with multiple brokers on the first visit in the community they are interested in, in order to narrow down the neighbourhood and then the property.

Buyers are not legally required to work with agents but it is recommended, and they do not pay a fee to brokers.

The housing stock in Vancouver is extremely varied, and buyers (along with their brokers often) need to decide what they are looking for, whether that’s “a deluxe penthouse with 360 views views or a house with land close to the university, Ms. Hanson said.

Once the house has been selected and the offer accepted, according to Ms. Hanson, a 5% deposit is used to bind the contract.

She said buyers should have a good chunk of money in one of the country’s Canadian banks for at least six months before they purchase. According to Ms. Hanson, foreign buyers are often required to show a reference letter from their primary bank, a possible credit report and evidence of the opening of their Canadian bank account.

They need to be there in person to sign mortgage documents.

In some cases, there’s a minimum 20% cash down payment that needs to be held in a Canadian bank for at least 90 days, and sometimes an additional “net worth” evidence of ability to pay mortgage.

Chinese immigration has always been a defining social, cultural and economic force in Vancouver – and Vancouverites know what the wrong side of history looks like. Railway workers from southern China began arriving as early as the 19th century, and at the beginning of the 20th century Vancouver was the stage for some of Canada’s ugliest episodes of racism: anti-Chinese riots, a “head tax” on ethnic Chinese, and later an outright ban on Chinese immigration.

As the city grew into a mecca of left-wing politics and hippie self-expression in the 1960s and 70s, the ideals of tolerance and inclusion became central to the central to the civic self-image. Today, more than 30% of residents claim Chinese ancestry and the city is, by the standards of most western countries,

Vancouver Fun Facts

Vancouver hosted the 2010 Olympic & Paralympic Games

Greenpeace, one of the world's most well-known environmental groups was founded in Vancouver in 1971.

Vancouver is consistently ranked as one of the world's most livable cities.

Movies and TV shows are often filmed in Vancouver and surrounding areas.

Notable celebrities born in Vancouver include Seth Rogen (comedian), Ryan Reynolds (actor), Michael Bublé (singer), Cobie Smulders (actor)

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