China’s market turmoil – Will it impact BC real estate?
As with any economic debate there are always opposing opinions. The Chinese stock market began the year with wild fluctuations and considerable losses that triggered an automatic shut down at one point. This may lead Chinese Investors to move their assets into markets not affected by the Chinese currency. According to Scotia bank Economics Vice President Derek Holt, as quoted in the Vancouver Sun “Canadian real estate … because our own currency has depreciated so much … that has put Canadian assets on sale from the vantage point of, say, Asian investors.” This is one way the turmoil may impact BC real estate.
As we all know this is not a new phenomena, and the result is reflected in the disproportionate market prices in Vancouver.
On the other hand the uncertainty affects us in other ways too as our own stock markets fall in response to the turmoil. Economists believe a falling stock market will have a negative impact on the Canadian economy, especially as we are so heavily dependent on resource exportation for which demand has slowed along with the Chinese economy,
The Chinese stock market is made up of 80% individuals as opposed to Institutions and one option for China is to devalue it’s currency, the recombine, to encourage exports. This would decrease the value of people’s savings which is another reason many may look to move their money offshore.
Is this having an effect on us here in the Okanagan? It is hard to tell yet I think. Our housing prices have not been affected in the same way as Vancouver as we have not seen as much interest here yet, but I believe there has been a steady increase in the purchasing of business opportunities here in the valley by Chinese investors. It is very hard to tell as real estate statistics do not reflect such phenomena. Also any Chinese investors who actually live in Vancouver may soon get tired of the rain and choose to migrate here instead as many Lower Mainlands have in the past.
If we just had a crystal ball it would be so interesting to know what the future holds for us, but for now we can feel confident in a steady local market and be grateful to have the opportunity to live in such a beautiful part of the world here in the Okanagan Valley.