The Chinese New Year will be upon us soon, with celebrations starting this Saturday January 28 and ending on February 11. The Rooster is one of the 12 Lunar New Year signs in the Chinese Zodiac, and each year also has an element attributed to it, which is one of five elements that rotate in two-year cycles. As last year was the Year of the Fire Monkey, this will be the Year of the Fire Rooster.
Around one year ago, we published this story about the possible changes in Vancouver real estate during the Year of the Fire Monkey, with some predictions for Chinese and other overseas buying patterns and likely government interventions. So how much did our experts get right over the past year – and what can we expect from the New Year of the Fire Rooster?
The Year of the Fire Monkey
Those who take note of such things observed that the Year of the Monkey denotes financial turmoil and unexpected events. Some speculated that this would translate into more real estate sales as volatility in China’s stock markets led to investors turning increasingly to Vancouver for a safe harbour for their money. Others warned that it meant that the market could be full of unpredictability – as indeed it was.
Foreign Buyer Tax
This time last year, speculation was already rife that the BC government might bring in a foreign buyer tax to try to help with affordability, with some expressing concern that such a policy must be well thought-through. Tammy Morin Nakashima, president of BC Notaries and a notary in Steveston, said at the time, “Our survey results indicate that the vast majority of real estate purchases in British Columbia are made by BC or Canadian residents. This points to the need for careful consideration of any related legislative changes.”
Nevertheless, the Year of the Fire Monkey did indeed see the abrupt introduction of a 15 per cent Property Transfer Tax surcharge for foreign buyers, but only after the market was already slowing through natural self-correction. So far, the average price of expensive detached homes has decreased slightly, but not even to levels seen during spring last year. And the price of entry-level condos and townhomes is holding steady – so there’s no evidence that the tax has made the market more affordable yet.
Luxury Homes Tax
At around the same time, industry insiders were mulling the possibility of a Property Transfer Tax surcharge on high-priced homes – for example, those above $3 million. Bob Rennie, Vancouver’s leading condo marketer, said, “What if we put a three or four per cent tax on properties over $3 million, and then repatriated that money as tax relief for first time buyers or properties under a certain amount?” – and he was far from alone in this sentiment, with the BC Real Estate Association also lobbying for the policy.
This was another policy to come to fruition right at the beginning of the Year of the Fire Monkey, with February’s BC Budget announcing that the portion of a home sale above $2 million would increase from two per cent to three per cent. The extra revenues seemed to be designed to pay for the Property Tax exemption on new homes of up to $750,000, also announced as part of the Budget – which no doubt was well received by Bob Rennie and the rest of the development industry.
Vacant Homes Tax
The third of the three new policies touted in last year’s Year of the Monkey predictions also became a reality in 2016, with Vancouver Mayor Gregor Robertson announcing in September the new policy to tax those who leave their home empty for more than six months of the year. More details were then released in November following a public consultation, including the tariff of one per cent of market value, the many exemptions, and the steep fines associated with non-compliance.
2017’s Year of the Fire Rooster
So with the Year of the Monkey bringing much of the volatility and dramatic change that was predicted, what does the New Year of the Fire Rooster bring?
The Rooster is associated with trustworthiness and hard work, and those doing business are advised this year to stick to practical and well-proven paths to ensure success, rather than risky ventures. Sounds like it could be business as usual in terms of Chinese buyers investing in Vancouver real estate, then?
Or perhaps not. Richmond-based fortune teller and astrologer Sherman Tai told REW.ca’s sister publication Business in Vancouver last week that the Vancouver real estate market will continue to slow this year.
“In the last 12 to 15 years, every year I was telling people that if they have money to invest, to invest it in the property market,” Tai said. “After 2015, and in my last year’s prediction in the Year of the Fire Monkey, I asked them to stop.”
Tai advises investors to continue being cautious in terms of Vancouver real estate, and that he thinks Vancouver real estate prices could fall up to 10 per cent, in part because the city is in the southwest corner of Canada. This is in line with widely reported industry predictions, but Tai says that it is because the stars say that Vancouver is currently a bad location for real estate.
“Some stars are good for property, and some stars are bad for property,” Tai told BIV. “This year, the bad star is going into the house.”
He added that the dominant fire element is also crucial in his astrological predictions. As real estate is an above-ground industry that is more strongly associated with water than fire, and water puts out fire and is therefore at odds with that element, this is another reason why this is not a good year for real estate.
However, developers who believe in the influence of the Lunar New Year may have reason to be optimistic, as may our current provincial government. Tai believes that the Year of the Fire Rooster will be great for the BC Liberals, as Christy Clark’s Year of the Snake astrological sign is compatible with the rooster – and the BC Liberals have historically been compatible with developers, such as the aforementioned Bob Rennie, who is a major Liberal supporter and donor.
Further research on the predicted effects of this Lunar New Year also suggest that development and architecture are industries that would flourish in a fire year, as they are associated with construction and metal elements that come from the ground, as does fire.
What do you think the Year of the Fire Rooster – or just this New Year in general – will hold for Lower Mainland real estate? Share your thoughts and predictions in the comments below.