Vancouver has been ranked the second most expensive housing market in the world in a report on international housing costs, second only to Hong Kong.
The annual Demographia survey looked at 360 housing markets and divided median housing prices against median gross household incomes. Houses in Hong Kong cost 15 times local median incomes, while houses in Vancouver cost 10 times median incomes.
All of Canada’s major metropolitan centers fared badly in the report, ranked as extremely unaffordable with Vancouver the most costly.
According to Tsur Somerville, director of the University of British Columbia Center for Urban Economics and Real Estate, the reason for Vancouver’s skyrocketing housing prices is simple — demand is larger than supply.
“Vancouver is a lovely place with limited land and people from all over the world want to live here,” he told Xinhua. “If you have an attractive area, naturally you’ll get people willing to pay a higher price to live there, willing to pay higher rents to live there and relative to their incomes, and you’re going to get an affordability challenge.”
Local realtors are predicting the days of purchasing a detached house for Cdn $600,000 (US $543,500) are now over in Vancouver. Earlier this month, a three-bedroom, two-bathroom house on the east side of the city marked as the cheapest on the market was sold for Cdn $643,000 (US $582,500).
Somerville also pointed out that immigration to Vancouver, Canada’s Asian gateway, stands at about 30,000 people per year and the resulting demand for housing will likely keep prices high.
“But I think as long as we’re getting an inflow of about 30,000 to 35,000 people a year, coming to Vancouver as part of coming to Canada, that’s going to be able to support the house prices.”
His view was echoed by Ross McCredie, director and CEO of Canada’s Sotheby’s International Realty. Since the flare up of the international financial crisis in 2008, housing prices in Vancouver have remained high compared to other large cities around North America.
He attributes house price stability in this market to the steady inflow of immigrants and investors not common to many other major cities around the continent.
“But certainly the foreign buyers are also an important part of this market and if we didn’t have those foreign buyers our market would have been in significant trouble through 2008,” McCredie told Xinhua.
He noted Vancouver is one of the most diverse and cosmopolitan cities in Canada with a good location and environment, which means that people will keep coming and will continue to buy-up the limited housing stock.
“Part of the problem with having a beautiful city, and a gateway, is that you have significant amount of demand from people who want to live here.”
Source: Fu Peng, Xinhua