“Here’s one,” says Melissa Fong. She’s browsing online real estate listings in a cafe near Vancouver’s City Hall. Behind her, the mountains of the North Shore – the view that launched a thousand bidding wars – rise through mist. “Three-bedroom townhouse, 1,400 sq ft, C$1.5m (£800,000). You could start a family in a place like this. Way, way out of my price range, though.”
Fong moves on, scrolling through half a dozen homes, each smaller than the last, until she arrives at a tiny, 500 sq ft condominium on the east side of the city. “Unassuming” would be a generous way to describe how it looks from the photos, which, tellingly, are all exterior shots. “You could live there if you only had one kid, right?” she says with a grim smile.
An urban planning researcher, Fong divides her time between Vancouver, where her elderly parents live, and Toronto, where she’s finishing a doctorate. She grew up in Vancouver, has deep roots in the city, and plans to settle here with her husband, a home renovator. But she has looked on with a mixture of frustration and horror as the cost of housing in Canada’s famously liveable city rise beyond the means of young professionals like her.
“When you think it can’t get any worse, it does. So you keep adjusting your expectations, you know?”
Over the past year, the price of a single family house in Vancouver increased by an incredible 30%, to an average of $1.4m. It’s just the latest, most dramatic jump in an already dramatic long-term trend that has turned the beautiful but unassuming Canadian city into one of the world’s least affordable, with a housing price-to-income ratio of 10.8. That’s third after Hong Kong and Sydney, and well ahead of London, which ranks eighth at 8.5.
Driving the rise is an unprecedented flood of foreign capital, mainly from China. “What you have is a huge pool of very wealthy people who want to hedge against uncertainty back home,” says Thomas Davidoff, a real estate economist at the University of British Columbia (UBC). “Combine anxious money – a lot of it – with a beautiful gateway city that has limited space to build, low property taxes, lax regulation on capital flows, and wealth-friendly immigration programmes, and you get a market like this one,” – a market where an ordinary house with a waterfront view can sell for $15m while people earning local wages struggle to buy or rent a home.
In spite of spiking inequality, policymakers have been slow to acknowledge the problem of foreign capital. Public debate about Vancouver’s affordability crisis has, until recently, been surprisingly circumspect – due in no small part to a very Canadian discomfort with talking about race.
From leftwing mecca to resort town for the super-rich
Chinese immigration has always been a defining social, cultural and economic force in Vancouver – and Vancouverites know what the wrong side of history looks like. Railway workers from southern China began arriving as early as the 19th century, and at the beginning of the 20th century Vancouver was the stage for some of Canada’s ugliest episodes of racism: anti-Chinese riots, a “head tax” on ethnic Chinese, and later an outright ban on Chinese immigration.
As the city grew into a mecca of leftwing politics and hippie self-expression in the 1960s and 70s, the ideals of tolerance and inclusion became central to the civic self-image. Today, more than 30% of residents claim Chinese ancestry and the city is, by the standards of most western countries, remarkably easygoing – though this ideal of harmony never quite squared with immigrants’ own experiences. Fong notes the pressure her parents’ generation felt – and still feels – to assimilate. “When we were growing up, they encouraged us to speak English at home instead of Chinese,” she says.
The lessons of the past go some way to explaining Vancouver’s almost religious embrace of multiculturalism, says David Ley, a UBC geography professor and wealth migration expert. “I think it’s very much part of the Canadian psyche to want to avoid these discussions,” he says. “We’re a polite and tolerant society that has been thoroughly schooled in the virtues of multiculturalism.”
Unfortunately, this also amplifies the uneasiness around the affordability discussion.
“It’s frustrating,” says Justin Fung, an activist with Housing Action for Local Taxpayers, a local advocacy group. “[The crisis] is a policy issue, it’s a social justice issue, and up until now, everyone is saying, ‘We’re nice, we can’t talk about this.’ Well, if you can’t even talk about where the money is coming from, you can’t do anything about it.”
Canada has long targeted “anxious” money from Asia. Right now, if you invest a five-year, interest-free amount of $800,000, you can effectively buy citizenship. (By contrast, a similar scheme in Britain, the Immigrant Investor Programme, offers citizenship for between £2m and £10m.) Such programmes have driven the globalisation of Vancouver’s real estate market. They were created in the 1980s with Hong Kong’s elite in mind: millionaires arrived by the thousands from Hong Kong ahead of the 1997 handover to China, and there was tension in Vancouver then, too.
What’s different about the current wave of wealth migration is the scale and speed of it. “Hong Kong is a small territory,” Ley says. “With China you have an amazing depth of capital – capital which is more and more eager to leave the country.”
That capital is turning Vancouver into a resort town for the wealthy. Heritage homes are being knocked down and replaced with mega-mansions. Teenagers drive quarter-million-dollar Lamborghinis. Nowhere is the fascination, scorn and exaggeration to which these gaudy lifestyles of the Asian nouveau riches are subject better exemplified than in Ultra Rich Asian Girls of Vancouver. The reality TV show follows the daughters of elite Chinese families as they float through a Vancouver that would be unrecognisable to most Vancouverites – including, probably, some of the ultra-rich the show purports to represent.
“From a western perspective, maybe there’s a certain crassness,” says Sonny Wong, a marketer who advises wealthy newcomers. “I had a chicken farmer from southern China come to my office. His income the previous year was US$100m. He doesn’t have a university education. Ultimately, though, he just wants to do well for himself and his family. So what do you do when you move to a new country? You buy a car and a house. And a $5m house and a Maserati are within his means. If you can afford it, that’s what you buy.”
What matters isn’t that wealthy people are immigrating to Vancouver from China, or anywhere else, really. It’s that they continue to earn the vast bulk of their wealth outside of Canada and they use that wealth to invest in Vancouver real estate. As a result, housing prices have decoupled from the labour market, putting people who earn local wages at a major disadvantage. Research by Ley and other academics shows a clear link between global wealth migration and local affordability.
While some economic migrants do start businesses here, the problem with Canada’s cash-for-citizenship programme is that it doesn’t encourage long-term investment or entrepreneurship beyond the initial outlay of money. Millionaire migrants might as well establish their families in Vancouver and continue to build their fortunes in China – and they do. A study by the Canadian government shows that, 10 years after arriving in the country, immigrants who used the investor programme declared marginal incomes, and paid only a fifth as much income tax as other Canadians.
Understandably, this outrages people. “If someone wants to live here, they shouldn’t just be parking a family here and earning all their money elsewhere,” says Raymond Wong, an engineer who grew up in east Vancouver, a traditionally working class part of the city that has seen prices skyrocket. “They should be contributing to the economy, putting down roots, fitting into the culture.”
Compounding the frustration is the fact that, according to experts, a major portion of the money flooding into the market is hot. Officially, the Chinese government limits the amount of money individuals can take out of the country per year to US$50,000. Wong recently launched an online petition to strengthen Canada’s notoriously lax federal anti-money laundering measures. It has attracted more than 10,000 signatures.
While such frustrations are unquestionably legitimate and stronger regulation is badly needed, the narrative of “putting down roots” makes some people uneasy. Melissa Fong supports affordability measures, but worries that talk of roots raises the spectre of a more insidious form of racism: respectability politics. “It’s the old question of what is a ‘good’ Chinese?” she says.
Ian Young, author of the South China Morning Post’s enormously popular Hongcouver blog, the must-read chronicle of Vancouver’s affordability woes, is more sanguine. “When you have thousands of super-rich settling in a new city in very short time, that’s discomfiting … people don’t know what to think,” he says. “But the issue here is [the buyers’] millionaire-ness, not their Chinese-ness. And I think most people get that.”
‘An almost uniquely Vancouver reaction’
And yet, hiding behind an absence of good data, government officials have mostly refused even to admit that foreign capital is making it impossible to buy a house in Vancouver – let alone act to level the playing field, for instance via a progressive property tax.
“I find it astonishing that Hong Kong, Singapore, Sydney, and London all have had right-wing, market-friendly governments which have intervened quite aggressively in trying to address unaffordability, yet nothing has happened here,” Ley says.
The debate is finally shifting, mostly thanks to a controversial study. Last year, Andy Yan, a respected local urban planner and academic, took Vancouver’s most expensive neighbourhoods and looked for buyers in a recent six-month period with non-anglicised Chinese names – that is, names without a “western” first or middle name, a method he and other experts defended as an imperfect but academically sound way of gauging tenure in Canada. Yan found that they accounted for two-thirds of all house purchases.
Several prominent figures in the real estate industry publicly questioned whether the study was racist. So did Vancouver’s mayor, Gregor Robertson. “This can’t be about race, it can’t be about dividing people,” he told the CBC. Some in the Chinese community expressed discomfort with the study as well.
Others, including Yan, were taken aback. “My great-granddad paid the head tax,” he told a local newspaper. “So to somehow use [concerns about] ‘racism’ to protect your privilege? That’s just absurd. This is an almost uniquely Vancouver reaction.”
Indeed, there is profit to be had by capitalising on people’s discomfort around race. Young sees a willingness on the part of politicians and the real estate industry, faced with the prospect of unpalatable policy decisions, to maintain the status quo. “There are a lot of vested interests here,” he says. “To red-flag the entire conversation as racist, I find that disturbing. This is the most profound social justice issue in Vancouver today.”
Suddenly, people were talking. Eveline Xia, a 29-year-old activist, started #donthave1million, a Twitter campaign to protest the exclusion of the middle class – especially young professionals – from the housing market. People from across Vancouver tweeted photos of themselves holding placards with their ages (usually 20s or 30s), level of education (usually high), and the #donthave1million hashtag. The campaign inspired a series of protests and meetings, that, with Yan’s study and Young’s reporting, seem to have changed the trajectory of the affordability debate.
“I think Chinese-Canadian voices have helped make it okay to talk about this stuff. They’ve helped to disambiguate the money and policy issues from the race issue,” says activist Justin Fung.
This month, Prime Minister Justin Trudeau finally went on record as saying overseas money is “obviously” a factor. Mayor Robertson spoke out in favour of a tax on absentee owners, something that 80% of Vancouverites support.
Yet Young doubts that taxes alone will solve the problem. “People shouldn’t see them as an affordability buster. The desire to get money out of China is so strong and so profound that even those penalties being proposed likely won’t make that much of a difference,” he says.
Close the dysfunctional and highly politicised cash-for-citizenship scheme, experts say. But no one expects that to happen soon.
Residents Claire Immega and Peter Harvie don’t. For them, the damage has been done, and they’re adapting by building their own house … in Immega’s mother’s backyard.
“The only reason it’s even an option,” says Immega, looking out from the window of her childhood home at a 25ft hedge that will have to be cleared, “is because my mother has lived in here for the past 20 years.”
Immega, a lawyer, and Harvie, a property manager, face the same choice as all young professionals in Vancouver: adapt or leave. Some choose to rent with friends. Some move home with family. Others, like Immega and Harvie, opt for “laneway homes”, an in-between measure, trading flexibility in exchange for affordability and a nicer neighbourhood. A whole sub-industry dedicated to laneway homes has sprung up.
The couple won’t ever be able to sell their house unless Immega’s mother buys them out. Nor can they build up if they start a family, thanks to strict zoning rules. Even so, they say, they’re luckier than many.
“For most of our friends, it’s take on a huge mortgage – if they can afford one – pay expensive rents for ever, or move away. A lot are moving away.”
Follow Guardian Cities on Twitter and Facebook and join the discussion
Comments (…)
Sign in or create your Guardian account to join the discussion