In 2019, investor buyers accounted for a significant 33.4% of all condominium apartment purchases in British Columbia, according to a detailed analysis by Statistics Canada. This figure highlights the substantial role investors play in the province's real estate market, particularly in urban centers like Vancouver, Kelowna, and Victoria. The data sheds light on the dynamics of investor activity in the pre-pandemic housing market and its implications for housing affordability and availability.

‍

The Prominence of Investors in the Condominium Market

The 33.4% share of condominium purchases by investors in British Columbia is notably higher than the 18.9% share of investor purchases for single-detached houses in the province during the same year. This trend reflects a clear preference among investors for condominiums, which are often seen as more affordable, easier to manage, and more likely to generate rental income compared to detached homes.

In comparison, Nova Scotia also saw a high proportion of investor activity in the condominium market, with 33.7% of condominium buyers being investors in 2019. However, New Brunswick presented a different picture, where investor activity was more evenly distributed between condominiums (14.5%) and houses (16.2%). These differences highlight the unique characteristics of British Columbia's housing market, where urbanization and high demand for rental properties drive investor interest in condominiums.

‍

Investor Activity in Major Urban Centers

The concentration of investor buyers in British Columbia's urban centers is particularly striking. In Vancouver, for example, investors accounted for a significant portion of condominium purchases. Breaking down the investor types in Vancouver:

• In-province investors made up the largest group, representing 25.2% of condominium buyers.
• Non-resident investors accounted for 7.5%, reflecting the influence of international buyers in the market.
• Out-of-province investors contributed 1.8% of purchases.
• Business entities represented 4.6% of condominium buyers.

Kelowna and Victoria also saw high levels of investor activity in the condominium market. In Kelowna, 21.4% of condominium buyers were in-province investors, while non-resident investors accounted for 6.8%. Similarly, in Victoria, in-province investors made up 19.9% of buyers, with non-resident investors contributing 7.0%. These figures underscore the appeal of British Columbia's urban centers to both local and international investors.

‍

Median Prices and Investor Behavior

The median prices paid by investors for condominiums in British Columbia varied depending on the type of investor. In Vancouver, for instance:

• Non-resident investors paid a median price of $605,000 for condominiums, higher than the $520,000 paid by non-investor buyers.
• Out-of-province investors paid a median price of $530,000.
• Business entities paid $595,000.
• In-province investors paid a slightly lower median price of $485,000.

This data suggests that non-resident investors and businesses were willing to pay a premium for condominiums, likely due to their focus on high-value properties in desirable locations. In contrast, in-province investors tended to purchase more moderately priced units, possibly targeting properties with better rental yield potential.

‍

The Role of Non-Resident Investors

Non-resident investors played a significant role in British Columbia's condominium market, particularly in Vancouver. They accounted for 7.5% of condominium buyers in the city, a figure that reflects the global appeal of Vancouver's real estate market. Within the Vancouver Census Metropolitan Area (CMA), the highest rates of non-resident buyers were observed in affluent neighborhoods such as:

• Richmond: 7.8% of buyers were non-resident investors.
• City of Vancouver: 7.8%.
• West Vancouver: 6.2%.

These areas are known for their high property values and strong demand for luxury housing, making them attractive to international investors.

‍

Implications for the Housing Market

The high level of investor activity in British Columbia's condominium market has significant implications for housing affordability and availability. With one-third of condominium purchases being made by investors, competition for these properties is intensified, potentially driving up prices and limiting access for first-time homebuyers and other non-investor buyers.

Moreover, the concentration of investor activity in urban centers like Vancouver, Kelowna, and Victoria suggests that these markets are particularly vulnerable to the effects of investor-driven demand. This dynamic may contribute to rising rents and reduced housing affordability in these cities, as investors often purchase properties with the intention of renting them out.

‍

Policy Responses and Future Trends

The role of investors in British Columbia's housing market has been a topic of concern for policymakers, particularly in light of the rapid increase in housing prices during the COVID-19 pandemic. While the data analyzed in this article predates the pandemic, it provides a baseline for understanding the dynamics of investor activity in the province.

In response to concerns about housing affordability, the federal government introduced a ban on sales to non-Canadians in urban areas starting in 2023, with some exceptions for those already residing in Canada. British Columbia has also implemented measures such as the foreign buyer tax and the speculation and vacancy tax to curb investor activity and promote housing affordability.

‍

Conclusion

The fact that 33.4% of condominium purchases in British Columbia in 2019 were made by investors highlights the significant role they play in the province's housing market. This trend is particularly pronounced in urban centers like Vancouver, where both local and international investors are active. While investor activity can contribute to the development of rental housing, it also raises concerns about housing affordability and accessibility for non-investor buyers. As policymakers continue to address these challenges, understanding the dynamics of investor behavior will be crucial for creating a more balanced and equitable housing market.

‍

Source: STATCAN