A recent report in the China Daily, a state-run publication based in Beijing, said Canada was "the most popular choice" for overseas investors while "growing restrictions on property purchases in major Chinese cities [are driving] the country's nouveau riche to look overseas for investment opportunities."

The newspaper noted that most overseas property purchases are motivated by a combination of factors including immigration, education and investment, with Canada, Australia and the U.K. topping the list of destinations.

The China Daily report also said buyers from the Chinese mainland represent between 40 and 50 per cent of the current market for pre-sale projects in Vancouver.

And

Real Estate Board of Greater Vancouver president Jake Moldowan said he believes lifestyle is the core reason for the interest. "Vancouver is an extremely desirable place to be."

He said that Richmond lots are now going for $1 million to $1.3 million. "And I know that there have been realtors from Hong Kong and mainland China, who fly over there, put packages together, and then bring people over."

Meanwhile, Bosa Properties announced this week that its 34-storey Sovereign tower in Burnaby's Metrotown sold out immediately, surpassing the single day sales record in the Burnaby market by selling $98-million worth of real estate.

Eoin Treacy's view This article by Brian Morton for the Vancouver Sun may be of interest to subscribers. Here is a section:

A recent report in the China Daily, a state-run publication based in Beijing, said Canada was "the most popular choice" for overseas investors while "growing restrictions on property purchases in major Chinese cities [are driving] the country's nouveau riche to look overseas for investment opportunities."

The newspaper noted that most overseas property purchases are motivated by a combination of factors including immigration, education and investment, with Canada, Australia and the U.K. topping the list of destinations.

The China Daily report also said buyers from the Chinese mainland represent between 40 and 50 per cent of the current market for pre-sale projects in Vancouver.

And

Real Estate Board of Greater Vancouver president Jake Moldowan said he believes lifestyle is the core reason for the interest. "Vancouver is an extremely desirable place to be."

He said that Richmond lots are now going for $1 million to $1.3 million. "And I know that there have been realtors from Hong Kong and mainland China, who fly over there, put packages together, and then bring people over."

Meanwhile, Bosa Properties announced this week that its 34-storey Sovereign tower in Burnaby's Metrotown sold out immediately, surpassing the single day sales record in the Burnaby market by selling $98-million worth of real estate.

My view - The Canadian economy weathered the financial crisis better than most. Canada's position as one of the world's largest commodity producers combined with a well regulated financial system has helped compensate for a slowdown in the domestic economy and a fall-off in demand from the USA. There appears to be a widening disparity between commodity exporting provinces such as Alberta and British Columbia over those with a manufacturing focus such as Ontario.

Interest rates remain close to historic lows but the pace of increases is likely to pick up. The Canadian Dollar rose through parity against the US Dollar in 2007 and 2008 and pushed back above $1 in January. Interest rate differentials relative to the USA are likely to remain favourable for the foreseeable future.

The last time the Loonie traded above parity for any meaningful period was during the last commodity bull market in the 1970s. Considering the strength of the commodity complex, the chance of it holding such a firm level looks favourable. A sustained move back below 98.5¢ would be required to question this hypothesis.

Canada has long espoused an active immigration policy in an effort to provide a young workforce for a growing economy and to at least partially offset its declining birth rate. Vancouver and Toronto have two of the largest overseas Chinese populations in the world. This is at least in part historic and both cities experienced inflows of people from Hong Kong and Taiwan in the 1980s and '90s. Mainland Chinese are now also seeking a bolthole outside of China and Canada is a favoured choice along with Australia, New Zealand and the UK. Housing in Vancouver is beginning to look frothy.

If Chinese are the marginal buyers, then the market is dependent on new demand continuing to support prices. The contention that mainland Chinese are looking further afield because of restrictions in their domestic market makes sense. However, if for any reason they stop buying, prices could experience a precipitous decline.

The government has tightened rules on amortization periods for government- backed insured mortgages. However, following a quick search, I found banks offering "New-to-Canada mortgages" at a loan-to-value rate of 95%. I may be incorrect, but these seem to have some striking similarities with nothing down, no credit history, low interest rate loans that predominated in the USA prior to the subprime crisis. In the event of a default, couldn't the new resident simply go back to their country of origin? I wonder just how prevalent these types of mortgages are?

This report by the Certified General Accountant Association of Canada dated May 2010 has some considerable detail on Canada's personal debt rate which subscribers may find of interest.

Canada was once highly exposed to the economic performance of the USA. The last decade has seen China become a major destination for commodity exports and China's citizens as major investors in Canadian property. This suggests that Canada's economy and potentially housing market is now more susceptible to a slowdown in China than in the USA.

The S&P/TSX Financial Index is likely to remain a bellwether. It continues to find support in the region of the 200-day MA and hit a new recovery high in early February. A sustained move below 1650 would be required to question medium-term upside potential.