Cost may no longer be the attraction for property purchasing, but the value of investment
The real estate market in Canada has become very expensive in the recent times. This has led to a significant decrease in the number of foreign investors. However, to completely cut off the demand from overseas, the Canadian Dollar will have to continue gaining more value.
There are many factors contributing to a high demand in the Canadian property, and a stable political climate is one of them. This has attracted quite some foreign investors to the Canadian property market. The demand is equal to both the commercial and the residential properties.
Despite the fact that there is 15% surtax on the residential properties, the demand stays resolute. Realtors keeping a close eye on the market have stated that the demand is the highest mainly in Vancouver and Toronto. This is a clear indication that the consumers are no longer concerned about the rising prices but only in the quality of their investment.
The current valuation for loonie seems to be hardly affecting the real estate market. Even the chief economist at Bank of Montreal, Doug Porter has been confident enough is stating that the foreign buyers in the Canadian market are not so mindful about the rising prices. To make a true impact on the foreign demand, the loonie will have to rise higher in valuation and stay almost on the same level with the US Dollar. At the so mentioned valuation, a barrel of oil would cost around $100. Although this is not impossible, it might seem to be a bit unattainable just at the moment.
For some weeks now, the Canadian Dollar has been on a steady rise. The currency deal may have stopped being favorable to the foreign investors in the recent times. On May 4th, 1 US dollar was equal to 1.3749 CAD, but by Friday, the valuation had changed to 1.26 CAD. This immediately resulted in a significant decline in the number of buyers, even among the Chinese holding US Dollar as cash.
The chief market strategist and head of trading at HiFX, Lennon Sweeting, too has stated that a strong valuation for the CAD would surely divert the potential foreign buyers. At the current foreign exchange levels, a slight surge in the property market is not enough to make the foreign buyers hesitant enough to make investments.
The trends in the property market are almost unpredictable for those who do not keep a keen eye. The prices are constant only on the rise and fall. When there was a rise in the value of the loonie, there was an increase in property demand. In the January of 2016, the loonie stood at 1.46 CAD for 1 US Dollar. This period too had seen a surge in the prices.
Since it was rather difficult to trace the number of buyers investing in residential properties, many may not have been able to get a clear picture of the investment activities. It is at least indicative of the fact that prices are not solely responsible for the number of investors.
This would, therefore, be a favorable time to lay a solid foundation for a real estate website. RealtyFocuz has been helping with the same for some time now. Along with constant updates of newer investment options, RealtyFocuz builds websites that are solely designed for realtors with extra facilities like an easy setup, user-friendly interface, automatic social media updates, listing search optimization and much more. A real estate website like this would help realtors present the best deals to the investors while allowing the investors in making a wise investment.
Various analysts, including Sweeting, have also stated that some of the foreign buyers could even be attracted solely towards the exchange rate in the Canadian-US Dollars. This is mostly applicable to the Chinese, who have huge chunks of money in the Dollar form.
Before the introduction of the 15% taxation in Vancouver Metro area, the foreign buyer’s share was 16.5%, as recorded in the June of 2016. However soon after the legislation change, this figure in Vancouver fell to 4 % and currently stands at this very price.
It is not necessary for every part of Canada to have a constant taxation. Ontario, for example, has introduced its taxes for the foreign investors. After this change in the taxation made in April, Ontario has also been tracking data especially Greater Golden Horseshoe area, including Toronto. From the collected data, it was observed that 4.7% of the total number of foreign investors was for the entire Greater Golden Horseshoe while it stood at 7.2 % in Toronto.
Edmond Luke, Fasken Martineau’s partner, based in Vancouver and the firm’s head of the department of China practice, has had the opportunity to observe the Chinese buying trends in the Canadian market. He states that the Chinese are mainly driven by the currency exchange rates and the pricing of Canadian assets. They may be rather good at predicting the currency valuations and deciding the impact made in the case of the rise and fall in the exchange rates.
Along with the factors deciding currency trends, it is also important to consider the role of taxation in the property market. In any case, the real estate prices alone are not responsible for determining the investment activities. Sweeting states that most people are more interested in making safe investments rather than the property itself. There might, however, be a drag in the sale of recreational properties.
Since there are so many aspects that go into determining the activities in the real estate market, a reliable and informative real estate website like RealtyFocuz would be more than just helpful during this time. Up till now, the largest recreational market investors have been Americans. Although the rising valuation of loonie did make a subtle impact in the recreational property market, experts believe that this change is less likely to have a significant effect on the present conditions of the rest of the urban real estate market.