Investors accounted for one of every four real estate sales in B.C. between 2018 and 2020 with Vancouver, Victoria and Kelowna drawing the most interest from investors.
These findings appear in a study from Statistics Canada that looks at the role of real estate investors among property buyers in three provinces — Nova
Scotia, New Brunswick and British Columbia — between 2018 and 2020, the starting year of the COVID-19 pandemic. The study defines investors as individuals who own at least one residential property not used as their primary place of residence.
The study builds on available research on the role of Canada's investment buyers in shaping affordability in the face of what the study calls "heightened concern."
As the study notes, these concerns led to policy actions on the federal and provincial level to curb inflation. In B.C., these measures have included a foreign buyer's tax, the speculation and vacancy tax and the pending flipping tax effective Jan. 1.
When averaged out, investors accounted for 24.8 per cent of real estate sales in British Columbia between 2018 and 2020, with 2018 being the peak year at 26.8 per cent and the 2020 being the bottom year at 22.8 per cent.
Investors accounted for 25.3 in Kelowna and Vancouver, and 23.9 in Victoria. No other studied census metropolitan areas recorded higher shares. Investors also searched out properties in rural regions of B.C., but only if those regions had high levels of tourism and recreational opportunities. Almost seven in 10 buyers purchasing properties in Whistler were investors. Nearly half of all buyers in the ski resorts of B.C.'s Interior were also investors. Surveyed resort areas included Golden, the electoral area home to Panorama Mountain Resort, Kimberley, Fernie, Revelstoke and Sun Peaks.
On average, most investor buyers in B.C. bought more expensive properties, the study notes. In Vancouver, for example, the 2019 median house price paid by foreign investment buyers ($980,000) was around 20 per cent higher than that paid by non-investor buyers ($820,000).
"However, when the price paid for each house or condominium apartment is examined relative to that property’s current assessment value, there was no significant difference between investors and non-investors in Vancouver, nor in other parts of British Columbia," it reads.
In short, although investment buyers spent more, they did not necessarily 'overpay'. As the report notes, prices were stable, or even declining during this period.
"An analysis of the later pandemic years, when prices rose sharply, may indicate a different pattern," it adds.
The study also shed light on the sociology of investor buyers. About two-thirds of all investment purchases made in B.C. between 2018 and 2020 were by purchasers with addresses in B.C. Out-of-B.C. buyers accounted for just under nine per cent, while foreign buyers accounted for about 13 per cent. The rest classified as business investors.
The study also found that most investment buyers owned only one or two properties, with B.C.'s rate being just under 71 per cent. About 17 per cent owned three or more properties, with the rest owning four or more. These figures have led the study to the conclusion that investment buyers tend to be what the report calls "small-scaler" investors.
Immigrants were also over-represented among investors relative to their share of the population in all analyzed large urban centres. The study notes that this finding matches other research that has found immigrant families were more likely to invest wealth in real estate compared with other assets.
Investment buyers also tend to be older, because it takes longer to accumulate the necessary wealth to purchase properties as an investment vehicle.
