‘Minimal’ effect from stocks turmoil: Experts

Despite the current turmoil in the Chinese stock market, experts are wagering that real estate in B.C. will be insulated from its effects in the short term.

It’s been three weeks since China’s most prominent exchange, the Shanghai Composite index, reached a 52-week high of 5,178.19, then began a sharp descent to close at 3,507.19 on Wednesday. But analysts say B.C. shouldn’t expect the slide to shake up the local housing market any time soon.

Yves Tiberghien, director of the University of B.C.’s Institute of Asian Research, said that because the market surged only recently — about 150 per cent over the past year — most investors who’ve diversified into Canadian real estate didn’t lose wealth as the market plummeted.

“Anyone who has been in the stock market in China more than three months is still sitting on profit,” he said. “And so the big real-estate companies or private entrepreneurs or officials who are taking money out — all those are not ‘new-new’ rich — they’re people who have been sitting on money for a while.”

Eva Busza, vice-president of research and programs at the Asia Pacific Foundation of Canada, said research suggests that 80 per cent of the investors in China’s stock market are retail investors, smaller “momand-pop” companies, many who only recently began buying up stock by borrowing from brokers.

Busza said a lack of data about the profile of Chinese investors diversifying into Canadian real estate makes it challenging to draw conclusions, but she also said it seems such investors were already wealthy and not from the working or middle class.

“The likelihood is that the impact on Vancouver real estate would be pretty minimal because the people who are investing in China are unlikely to be the ones who have the kind of assets to be able to be investing in Canada and Vancouver,” she said. “It’s probably a very different set of investors, so it’s not likely to have an immediate impact.”

Tsur Sommerville, director of UBC’s Centre for Urban Economics and Real Estate, called the stock market’s boom and bust “a classic bubble that is completely disconnected” from the Chinese economy.

”I think the capital outflows you’ve seen from China that have affected aspects of our real-estate market — and immigration from China of people from wealth — are not things that are going to be affected by turns one way or the other in the Chinese economy,” he said.