How Will China’s Stock Market Troubles Affect Real Estate?

 

China’s recent stock market scare has created some undeniably alarming headlines around the world. With terms like “Black Monday” and “The Great Fall of China” being liberally tossed around in the media, understandably, many clients have been asking me about the effects on the real estate market. Quite bluntly put, I don’t know. It’s never easy predicting any kind of market, and that includes the real estate market here in Toronto.

 

However, I can tell you that our supply of listings is low and our interest rates are also low. For the most part, the people I speak with have confidence in the market, and I certainly don’t see anyone selling properties in a rushed panic. In fact, we are still experiencing multiple offers on our listings.

 

If you have been following the news, you will have seen a plethora of predictions and expert opinions that don’t necessarily come to a neat conclusion, but here are a few things to take note:

 

A lot of the worries regarding the stock market crash in Canada came rippling in from the US, as the major concern was regarding the effect of China on the US central bank, the Federal Reserve. However, the potential threats to the US economy are not properly understood, and this uncertainty was a major factor that drove the market to destabilize. In short, it was people’s fears that caused a whole lot more fear.

 

There are some expected slowdowns, but not to the extent of people selling or liquidating their assets. Canada sees a lot of Asian buyers and they tend to invest here regardless of stock market fluctuations because it’s fairly safe either way. If stocks are down in China, people send their funds here for safety; if stocks are up, their extra money is used on more real estate investments.

 

In a reflection of the volatile state of the current global economy, Canada fell into a recession in the first half of this year. However, experts are optimistic as reports show that trading was up in June, leading to predictions that numbers for the third-quarter may be revised up.

 

Undoubtedly, there will be more reports to come and more expert opinions, but based on what I know, I am not selling any of my real estate holdings in the near future.