Sydney property prices are a long way from the top if Vancouver’s housing market is any guide.
In early January The Vancouver Sun reported that The Real Estate Board of Greater Vancouver (REGBV) announced that in 2015 “home sales were the highest annual total in REBGV history.”
That momentum appears to have continued into 2016. Zerohedge reported overnight that the sales surge saw residential property sales increase an astounding 31.7% in January. That takes them 46% above the 10-year average sales for January and means that January 2016 was the second highest January sales month ever.
Of course sales of this magnitude have an impact on prices when there is limited supply, as there appears to be in Vancouver.
That’s driven the benchmark price for a detached home in Vancouver to $1.292 million, the REBGV said this week. That is a new record and up 27.8% in year on year terms. But the benchmark appears to undersell the true prices that houses are selling for in Vancouver at the moment with the REBGV reporting separately that the average sale price in metro Vancouver is $1.83 million. That’s a one-year gain of 40%.
Certainly Vancouver is a desirable location within Canada itself. But given Canada’s economic growth has weakened under the weight of the collapse of the oil price, locals are wondering if the foreign money is driving prices higher.
Thomas Davidoff from the University of British Columbia’s Sauder School of Business told Vancouver radio NEWS1130 that “anecdotally, one hears that foreign investors are turning to condos and townhomes now that single family homes have been bid up as high as they are and the supply is as limited as it is.”
Certainly Chinese buyers look like they may be in the frame given the ructions in China and the desire of wealthy Chinese to get money out of China. No one knows yet because there isn’t any credible data. But British Columbia is studying the level of foreign investment in the real estate market.
Regardless, UBC’s Davidoff “is one of many academics who have put forward a taxation plan to address the problem. The group is calling for a surtax on vacant properties with owners who don’t contribute to the tax base,” NEWS1130 said.