What is predicted for Canada’s housing market this year?

March 24th, 2014

Canadian housing market gets clean bill of health

The Conference Board isn’t buying the notion that Canada’s housing market will suddenly crumble, saying the most likely outlook is for a modest decline nationally and in some specific markets.

The Ottawa-based think-tank argues in a comprehensive new look at real estate in Canada that the conditions for a crash simply don’t exist, despite numerous reports that the market is overbuilt and overvalued.

Rather, the report argues that with the possible exception of Toronto, housing starts the past three years have been roughly in line with the 20-year average.

Even in Toronto, there is only a “borderline” case that it could be overbuilt.

“At this point in the housing cycle, there is a risk that Canadian housing prices in some market segments are due for a modest correction,” the report states.

“Nevertheless, we believe that continued population growth, additional employment gains and modest mortgage rate increases will limit potential price declines in 2014 and 2015.”

There is a case for more dramatic price adjustment further out if higher mortgage rates start crimping affordability, the Conference Board says, but even then it is likely to be a soft rather than a hard landing.

In recent years, some economists and international organizations such as the OECD, the IMF, Deutsche Bank and The Economist magazine have described Canada’s housing market in stark terms, characterizing it as among the priciest in the world based on historical averages and other metrics.

But the consensus of economists within Canada has tended to be more subdued. Last week, the Canadian Real Estate Association also predicted a slowdown as mortgage rates start edging up later in the year, but it still saw the market overall growing in 2014 and 2015.

The Conference Board says fears of a housing bubble about to burst in Canada are exaggerated.

It says some of the evidence cited by correction hawks, including comparing home prices as a multiple of rental costs, don’t take into account historically-low mortgage rates that keeps affordability steady. Citing Toronto, it notes that in 2013 mortgage payments consumed less than 20 per cent of average household income, the same as in 1993.

“Mortgage costs, not just house prices, are the principal deciding factor for potential homebuyers,” says Robin Wiebe, the think-tank’s senior economist.

Even when mortgage rates do start rising, the Conference Board believes it will happen gradually and over an extended period. For instance, it forecasts rates with only a gain of 200 basis points — two percentage points — by 2017 or 2018.

But at current low rates, the typical homeowner on a posted five-year rate will have paid down $42,104 principal on a $100,000 in mortgage debt, so affordability won’t be seriously impacted once it comes time to renew at a higher rate.

The Conference Board provides an outlook on six major cities:

— Vancouver: Moved back into balance last spring. Recent price gains will give way to slower advances in 2014.

— Calgary: A approaching sellers’ conditions, noting strong price gains last year.

— Edmonton: Balanced, with brisk resale and price growth activity last year.

— Toronto: Balanced with healthy price growth. A major correction is difficult to see given solid employment and population growth.

— Ottawa: Market cooling due to falling employment from the government sector, flatter sales and tempered prices.

— Montreal: Flirting with buyer’s market conditions with sales and average prices having dropped somewhat last year.

Source: Julian Beltrame, The Canadian Press

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Want a piece of history? Walt Disney’s US$90-million estate is up for sale!

March 21st, 2014

Click on the image above to see the video

A mega-mansion built on the former estate of Walt Disney has hit the market for a mind-numbing US$90 million. The Carolwood Estate rests on four acres in Beverly Hills and includes the tunnel Walt Disney built for his steam engine train.

Built in 2001 and owned by investor Gabriel Brener, the residence is located in the affluent neighbourhood of Beverly Glen in Los Angeles. And even in an area where the median house price is around $1.4 million, this property stands out in a big way.

First of all, it sits on the 3.7-acre estate that was the site of Walt Disney’s last home, which was dismantled in part because of an asbestos problem. The home built in its place is a whopping 35,000 square feet, with eight bedrooms and 17 bathrooms.

According to the listing, the mansion features a wine cellar, a custom movie room, three bars, a library, a gym and two safe rooms. On the home’s carefully manicured grounds, you’ll find a pool with a pool house, a tennis court, and a putting green.

Jay Harris and Mauricio Umansky of The Agency have the listing.

Source: Harris Effron, AOL Real Estate

This Canadian Real Estate Blog was brought to you by BestHomesBC.com. Looking for a home to buy in Vancouver? Check out BestHomesBC.com for properties for sale throughout British Columbia. Looking for an assignment condo? Check out AssignmentsCanada.ca for pre-sale condos for sale in Canada.

Which are the world’s most expensive housing markets?

March 20th, 2014

A family eat dinner in their cramped HK apartment

Economists continue to watch Canada’s housing market. According to the Canadian Real Estate Association, the average house price climbed to $388,553 in January, which is 9.5 per cent higher than it was last year. But how do Canadian cities compare to the rest of the world when it comes to the affordability of housing?

The rankings below are based on a city’s ‘Median Multiple,’ which looks at the median cost of a house compared to the city’s median household income in the third quarter of 2013.

10. London, U.K.

Median multiple: 7.3

International investment in London’s housing market has driven housing prices up and made it less affordable for moderate and low-income households. London’s median multiple puts its housing market into severely unaffordable territory; the median price of a home is 326,000 pounds ($546,310), while median household income is 44,800 pounds ($75,076), as of 2013. The good news is that the city’s median multiple dropped from 7.8 in 2012. London has the most unaffordable real estate market in the United Kingdom. The U.K. has a median multiple of 4.9, which is a slight improvement from last year’s 5.1 rating.

London’s overheated housing market has contributed to rising home prices in the U.K., which is expected to jump by seven per cent this year, according to Reuters.

9. Los Angeles, Calif.

Median multiple: 7.7

Los Angeles’ housing market, along with other cities in California, is causing concern; the median multiple has risen at more than three times the national rate since 2009. In December 2013, Los Angeles’ house prices increased a whopping 20.3 per cent from the year before. A recent study by RealtyTrac found that it would be cheaper to rent rather than buy a three-bedroom property in Los Angeles. According to the Demographia study, Los Angeles’ real estate is considered to be severely unaffordable and the city has made land use regulation more restrictive. The City of Angels is the fourth most unaffordable housing market in the U.S. with a median house price of $448,900 and a median household income of $58,300 in 2013.

8. San Diego, Calif.

Median multiple: 7.9

San Diego is another California city where foreign investment is driving up the city’s real estate prices. The median house price in the latter part of 2013 was $485,000, while the city’s median household income was $61,500. In just one year, from December 2012 to the same month in 2013, the value of San Diego homes increased by 18 per cent. While home supply remains at an historic low, Michael Lea, a real estate professor at San Diego State, expects that house appreciation will slow down to single digit increases in the next few months.

7. Auckland, New Zealand

Median multiple: 8.0

Houses in Auckland were less affordable in 2013 than the year before (its median multiple increased to eight from 2012’s 6.7 score). The city has been ranked severely unaffordable for all 10 years of the Demographia housing survey. The median house price in Auckland is $561,700 AUD ($506,990), with residents earning a median household income of $70,600 AUD ($63,724). Auckland saw a dip in home prices in January, but it’s predicted that the city’s housing market will be active during the first quarter of 2014. High housing prices in the city are also raising prices in the suburbs.

6. Melbourne, Australia

Median multiple: 8.4

Melbourne’s housing affordability has deteriorated — its median multiple increased by 0.9 points from last year. Housing in Melbourne, along with other major markets in Australia, has been severely unaffordable since the Demographia housing survey’s inception. In 2013, Melbourne’s median house price was $595,500 AUD ($537,498), while its median household income was $70,800 AUD ($63,904). Melbourne’s house prices rose by 3.2 per cent in January with the median price of a residential property reaching $553,000 AUD ($493,829), according to the Sydney Morning Herald. It’s expected that there will be a slowdown in Melbourne’s house prices due to higher levels of housing supply and deteriorating affordability.

5. San Jose, Calif.

Median multiple: 8.7

Yet another Californian city where housing affordability has deteriorated from the year before, San Jose’s median multiple was 7.9 in 2012. In the latter half of 2013, the median house price for a property in San Jose was $805,000, with residents in the city earning a median household income of $92,400. San Jose is among 11 California cities that have been deemed unaffordable. San Jose’s housing market will continue to perform well in 2014, according to the Urban Land Institute’s Emerging Trends in Real Estate 2014 survey. It’s expected that increased jobs and wages in this area will contribute to higher demand for property.

4. Sydney, Australia

Median multiple: 9.0

Sydney is home to the most unaffordable housing market in Australia and affordability continues to worsen. The median multiple rose from 8.3 last year to this year’s 9.0. The median price of a home in 2013 was $722,700 AUD ($652,309) with households earning a median income of $80,500 AUD ($72,659). Sydney has been deemed severely unaffordable for the last decade. While an American economist has predicted that Australia’s housing market will see a 50 per cent drop in values, Canada’s recent decision to axe the Immigrant Investor Program could drive more foreign investors to the Land Down Under, according to the Sydney Morning Herald. Foreign investors are one of the reasons cited for the rapid rise in housing prices.

3. San Francisco, Calif.

Median multiple: 9.2

San Francisco is considered to be the most unaffordable city in the United States, where an average school teacher is unable to afford property in the city, according to Bloomberg Businessweek. In 2013, the median household price for a home was $705,000 and the median household income was $76,300. Affordability has worsened since last year’s survey when the median multiple was 7.8. Within the last 10 years, 75,000 new people have made San Francisco their home, but only 17,000 new residential units were built, according to The New York Times. Over the next 25 years, 150,000 more people are expected to move into the city. With a large influx of well-paid Silicon Valley workers, the costs of real estate and rent have risen to new heights. And prices are unlikely to drop soon; San Francisco has been voted the top housing market expected to perform well in 2014, according to the Urban Land Institute’s Emerging Trends in Real Estate 2014 survey.

2. Vancouver, B.C.

Median multiple: 10.3

Vancouver’s affordability has worsened over the last year; the city’s median multiple is now in the double digit range, rising from 9.5 last year. This is the sixth year that Vancouver’s housing market has placed within the top three unaffordable housing markets in the world. In 2013, the median price of a house was C$670,300 and the median household income was C$65,000. In February, Vancouver broke a real estate record with the average cost of a detached house climbing to C$1,361,023, according to the Real Estate Board of Greater Vancouver. But some Vancouver real estate agents are expecting housing values to drop with the federal government’s recent decision to scrap the Immigrant Investor Program.

1. Hong Kong

Median multiple: 14.9

Hong Kong has the most unaffordable housing market in the world. Residents of the island buy the smallest houses for the least affordable prices; in 2013, the median price of a home was $4,024,000 HKD ($518,496) and residents earning a median household income of $270,000 HKD ($34,790). This is the fourth year that Hong Kong has claimed the top spot — housing affordability has worsened from last year’s 13.5 median multiple score. Since 2008, the price of real estate in Hong Kong has increased by 120 per cent, according to Reuters. But government policy to double a levy on properties worth more than $2 million HKD may successfully cool the market with prices dropping by 4.5 per cent since last March’s peak price, according to the South China Morning Post. It’s expected that developers will need to undergo steep competition to attract homebuyers this year, which could result in cheaper prices for property shoppers.

Source: Josephine Lim, MSN Money

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B.C. home sales expected to see largest year-over-year increase

March 18th, 2014

Realtors recorded 2,661 sales in October, up 38% from the same month a year ago

Canadian home sales are expected to rebound this spring, with B.C. forecast to see the largest year-over-year increase and contribute the most to national sales activity.

The province is expected to see an 8.3 per cent increase in sales activity, according to the Canadian Real Estate Association, compared with a plus or minus three per cent increase in activity across the other provinces in 2014.

The national average home price is expected to rise by 3.8 per cent to $397,000 this year, with similar sized gains in B.C., Alberta and Ontario.

National resale housing activity has started slowly this year, partly because of stronger levels of activity recorded last summer and fall when buyers with pre-approved mortgage financing advanced home purchases before their lower pre-approved rates expired.

Home sales are expected to trend higher heading into the spring and be boosted over the second half of the year with a “widely anticipated pick-up in Canadian economic growth.” Sales are forecast to reach 463,700 units in 2014, up 1.3 per cent from a year earlier.

In 2015, national activity is forecast to edge up a further 1.2 per cent to 469,400 units. Affordability is expected to restrain activity in Canada’s most expensive markets, with annual sales forecast to decline marginally in B.C.

Source: Kelly Sinoski, Vancouver Sun

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Top Spring Break ideas in beautiful British Columbia

March 14th, 2014

Cycling is just one of the activities to be enjoyed

Sure, you could decide to spend spring break doing your annual domestic deep-clean. But explain that to your kids, who just heard their friends are heading out on exciting spring break escapes in regions across the province. Here are just a few excursions the whole family can enjoy:

1. Surf the coast

If you thought surfing was a uniquely southern sport, think again. The sport is booming on beach breaks in and around Pacific Rim National Park Reserve on the west coast of Vancouver Island. The apex is located just south of Tofino, but Ucluelet — known as Ukee by locals — is gaining a reputation as a jumping off point on the shoulder of the wave.

Lessons: Surf schools abound, with lessons starting around $75 per person per session, including board and wetsuit. Alternatively, rent a long board and suit from $15 each per day. Among the many suppliers are Live to Surf, the granddaddy of the area’s surf shops, or Canadian pro Sepp Bruhwiler’s Westside Surf.

2. Carve it up

Spring is upon us, but the snow hasn’t gone anywhere in the higher reaches. Warmer temperatures lend themselves to sun-soaked resort patios and sunburnt faces — both of which may come as a welcome change after winter. With resorts across the province, this is one activity that can be done in nearly everyone’s backyard.

Day lift passes: Consider Sun Peaks near Kamloops (adults from $79), Revelstoke ($80), Big White near Kelowna ($79), Mount Washington near Victoria ($75), or Whistler/Blackcomb near Vancouver ($115).

Lessons and equipment: Many resorts have learning sessions starting from under $60 and equipment rentals from $40. Some mountains offer package deals.

3. Swim Harrison Hot Springs

If you need to rejuvenate those sore muscles and that bone-tired soul, head to the indoor and outdoor mineral pools at Harrison Hot Springs Resort. The kids will have too much fun to interrupt your relaxation, and if you’re not a parent, don’t fret — some pools are adults only.

Admission: Access to the resort’s five pools is only for guests, with two-night spring break family packages starting from $449, and bed and breakfast from $139. If you stay elsewhere in the area there is a public hot pool in the centre of town that costs $9 per swim for adults, or about $13 for the day.

4. Flip a coin in the capital

Victoria’s mild year-round climate makes it an obvious choice for a spring getaway for the family. Wind permitting, try taking the helm of a sailboat as you brave the Strait of Juan de Fuca or round the Discovery and Chatham islands. On a calm day, opt instead for a motorized harbour tour, then one of the city’s indoor activities like the Royal BC Museum and its current exhibition on wildlife photography.

Prices: Charter a boat for a half day for $400, or for $675, take it for the day at Blackfish Sailing Adventures. Harbour tours are $22 for adults, and museum admission is $16 for adults, or $25.80 including a screening at the Imax.

5. Go for a ride

March is not always known for its blue skies, so to up your chances of fair weather, head to the Sunshine Coast and pedal some of the area’s dozens of scenic bike routes. There’s no guarantee you’ll end up with a tan, but you’ll have a great time whatever the weather, and whatever your style of riding or skill level. Should it happen to rain, there is plenty to do and explore indoors.

Costs: Ferry fees from Horseshoe Bay to the Sunshine Coast are $50 per vehicle and $15 per passenger. If you’re renting bikes or want a tour, try Off the Edge Adventure Sports, where rides start at $40 per day and guided trips from $130 per person.

7. Get back into hibernation

Tired of above-ground activities? Try spelunking. Horne Lake Caves Provincial Park, located just west of Parksville on Vancouver Island, is home to an explorable network of caves packed with crystal formations and fossils. The caves can be a wet at times, but caving is the kind of activity that demands getting out of your comfort zone.

Costs: Self-guided caves are open daily, and helmets with lights can be rented for $8.50 from Horne Lake Caves & Outdoor Centre. They also offer three-hour spelunking tours for $69 for adults, with all equipment included.

8. Make your footprint

Snowshoeing is a relatively inexpensive way to see some pristine backcountry all across the province. If you simply can’t get away for spring break, take a few hours and head to your local hills. For something further flung, try Fernie in the East Kootenay region.

Costs: Rent a pair of snowshoes for around $22 a day, or head out on a tour.

8. Rediscover our coastal heritage

Haida Gwaii is far from most B.C. cities, but getting there is a key part of this serious adventure and there’s plenty to do when you arrive. Catch a ferry along the Inside Passage before BC Ferries cuts this legendary route, then cross the Hecate Strait. Once the multi-day journey is through, stretch your legs and explore Gwaii Haanas National Park Reserve and Haida Heritage Site or visit the Haida Heritage Centre at Kaay Llnagaay. Your family will surely remember this trip.

Fares: Ferry fees for a one-way trip from Vancouver Island to Prince Rupert, then on to Skidegate are around $175 per person and flights between Masset and Vancouver start around $250.

Source: Matt Robinson, Vancouver Sun

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Vancouver’s house prices and Chinese immigration – an expert’s view

March 12th, 2014

A graph from David Ley’s book, Millionaire Migrants, dramatically depicts how Vancouver home prices and international immigration to the city moved in lockstep (1977-2002).

I recently came across this interesting article written by Ian Young who blogs for the South China Morning Post about immigration, property prices and Vancouver.

No one in Vancouver better understands the impact that rich immigrants have had on the city’s property prices than Professor David Ley.

Ley, holder of the Canadian Research Chair in Geography, literally wrote the book on the subject. Millionaire Migrants, published in 2010, is the definitive account of latter-day East Asian migration to Vancouver, describing how wealthy newcomers and their migratory patterns moulded the city.

It’s no surprise that he has been closely watching the fallout from the Canadian government’s surprise decision last month to terminate the 28-year-old Immigrant Investor Programme (IIP), which has brought tens of thousands of Chinese millionaires to Vancouver.

Oxford-educated Ley has particularly noted attempts to downplay the impact of the scheme and its closure on Vancouver’s sky-high property prices, which he said represented deliberate “suppression”.

“There are interest groups who are in denial and the moment that you or I make a suggestion [about the impact of rich immigrants on property prices] we are immediately racist and this is how the discussion has been closed down,” the University of British Columbia academic said.

“We are very polite in Canada and if anyone raises the red flag of racism then everyone shuts up. To my mind that is an irrelevance. The issue is investors, wherever they are coming from, creating an issue of affordability in the market.”

Ley’s previous research revealed the exceptional correlation between international immigration to Vancouver and the city’s property prices. He charted this from 1977 to 2002, with the results presented in eye-popping clarity on page 153 of Millionaire Migrants. A graph (above) of the two factors shows them moving in near lockstep.

Ley calculated the correlation at +0.94; that’s about as close to a statistical sure thing as you can get.

By contrast, “made in Canada variables” – interest rates, employment, domestic Canadian migration and rental vacancy rates – proved rather hopeless as price predictors. Interest rates, routinely touted as the most significant factor in Vancouver’s property boom, had a negative correlation, of -0.12.

During this period, prices peaked in 1995, then fell when migration from Hong Kong all but ceased. The drops that followed were concentrated in areas favoured by rich Hongkongers, such as wealthy Shaughnessy. “The overall prices dropped, although it was concentrated. In Shaughnessy, prices went down by 25 per cent … that’s a big drop,” Ley said. “But it was not as great across the market as a whole.”

Now for the big question: is the current Vancouver market similarly tied to mainland Chinese migration? And is the cessation of the IIP analagous to the way that Hong Kong migration under the scheme halted in the mid-1990s?

Sadly, Ley isn’t sure. “There are a number of similarities. It’s not perfectly the same,” he said. He notes that the Asian financial crisis coincided with the Hong Kong handover, exacerbating the sell-off in Vancouver as immigrants repatriated their funds to the SAR.

“The combination of the exodus [back to Hong Kong] plus the repatriation of funds led to significant sales and declines in the high-price property markets here,” he said.

Nevertheless, Ley takes issue with some observers who have sought to disregard the impact of the IIP on Vancouver prices. These critics point out that arrivals in British Columbia under the scheme (recently averaging 4,600 individuals, or 1,340 households, per year) are dwarfed by greater Vancouver’s 25,000-30,000 annual residential sales.

“The problem with that argument,” said Ley, “is that if that estimate of a couple of thousand does not include secondary migration from other parts of Canada then that is an underestimate.

“The other point: are people coming in buying only one property? Undoubtedly, it has been that property is the primary form of class mobility and property is a very easy investment to manage. I would question that these folk are only buying one property.”

Ley said the investor migration scheme also fuelled Vancouver’s market in indirect ways – namely, by helping word get out among China’s rich that the city’s real estate market was a convenient, friendly and profitable place to invest. If such word-of-mouth turns in the other direction, will prices do the same? That remains to be seen.

This Canadian Real Estate Blog was brought to you by BestHomesBC.com. Looking for a home to buy in Vancouver? Check out BestHomesBC.com for properties for sale throughout British Columbia. Looking for an assignment condo? Check out AssignmentsCanada.ca for pre-sale condos for sale in Canada.

Where are the real estate price increases in Metro Vancouver?

March 11th, 2014

Real estate prices start year with gain in Metro Vancouver and Fraser Valley

Lower Mainland real estate markets climbed modestly in the first two months of the year.

The Fraser Valley Real Estate Board (FVREB), which includes Surrey, White Rock and North Delta, reported a benchmark detached house price of $558,100 in February, up about 1.5 per cent from December and up 3.2 per cent year-over-year.

Townhouses were up 0.7 per cent to $296,700 from February of 2013 but the benchmark price of Fraser Valley apartments dropped 4.6 per cent from a year ago to $193,200.

The Real Estate Board of Greater Vancouver said its benchmark price for a typical detached house climbed 3.5 per cent from a year ago to $932,900.

Attached units were $458,300 – a 0.6 per cent one-year gain. Apartments were up 3.6 per cent over one year to $373,300.

The biggest one-year gains reported were for detached houses in Vancouver and South Burnaby, which are up more than seven per cent, while detached houses in North Delta and Langley were up six per cent.

The biggest recent drop was in Abbotsford apartments – their benchmark price is down 21 per cent from a year ago.

Other areas where prices have dropped include apartments in Squamish and Whistler – both down 13 per cent – and detached houses on Bowen Island and the Sunshine Coast, both down more than four per cent.

The most expensive market to buy a detached house remained the west side of Vancouver, where the benchmark price is $2.15 million, while the cheapest was Mission at $352,800.

It’s taking less time for a home to sell – an average of 51 days in the Valley.

Both real estate boards reported sales are up significantly, reflecting a typical jump in buyer interest as spring approaches.

Source: Jeff Nagel – Surrey North Delta Leader

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Vancouver home sales increase 44%

March 7th, 2014

Source: World Property Channel

The number of homes sold in Vancouver increased 44 percent in February compared to the previous month, after a monthly drop reported in January.

A total of 2,530 homes were sold in February, up from 1,760 sales in January, according to the Real Estate Board of Greater Vancouver.

“Home buyer demand picked up in February, which is consistent with typical seasonal patterns in our housing market,” said Sandra Wyant, REBGV president. “We typically see home buyers become more active in and around the spring months.”

Last month, the Canadian Real Estate Association reported the fifth consecutive decline in monthly sales for the country, citing weather conditions as a detractor.

Today’s report shows home sales grew 41 percent from 1,797 sales in February 2013. The February figure was just 17 sales away from the 10-year sale average for February of 2,547.

The number of listings for all property types totaled 4,700 in February, dropping 2.8 percent from a year ago, and declining 12.1 percent from listings in January. February’s listing count was less than the region’s 10-year new listing average for the month.

“With the market continuing to perform at a steady, balanced pace, it’s important for home sellers to ensure their homes are priced correctly for today’s conditions,” Ms. Wyant said.

The benchmark price for all homes in Metro Vancouver is $609,100, increasing 3.2 percent increase from a year ago.

More from the report:

* Sales of detached properties in February 2014 reached 1,032, an increase of 46.6 percent from the 704 detached sales recorded in February 2013, and a 6.3 percent decrease from the 1,101 units sold in February 2012. The benchmark price for detached properties increased 3.5 percent from February 2013 to $932,900.

* Sales of apartment properties reached 1,032 in February 2014, an increase of 35.8 percent compared to the 760 sales in February 2013, and a 1.2 percent increase compared to the 1,020 sales in February 2012. The benchmark price of an apartment property increased 3.6 percent from February 2013 to $373,300.

* Attached property sales in February 2014 totaled 466, an increase of 39.9 percent compared to the 333 sales in February 2013, and a 9.9 percent increase from the 424 attached properties sold in February 2012. The benchmark price of an attached unit increased 0.6 percent between February 2013 and 2014 to $458,300.

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Where is the world’s top property hotspot?

March 7th, 2014

London and New York are ranked no.1 and 2 for property investors

The UK and London are still the leading targets for UHNWIs (ultra-high net worth individuals), while property markets in some cities hammered by the global crash are now prospering and prices are generally rising around the world, according to the 2014 Wealth Report, from Knight Frank.

London retains its crown as the world’s leading global city for the world’s richest, followed by New York, and the two are set to remain there for at least a decade, according to the Knight Frank Global Cities Survey, which is part of the Wealth Report.

And at the same time, UHNWIs appear to be getting richer, with the highest optimism about the future among those in Europe and the Middle East.

But the fastest growing luxury residential property market is dominated by Asia Pacific destinations. Jakarta, Indonesia, has the highest annual home prices, rising 38% year-on-year. New Zealand has performed well, taking second place with Auckland, where values are up 29% and Christchurch in fourth at 21%. Bali is in third place, with a 22% increase, according to Knight Frank’s Prime International Residential Index.

In general, prices are rising, and some locations that suffered most in the global market crash are performing particularly well.

Liam Bailey, Head of Global Research at Knight Frank, says, “Continued global wealth creation, particularly in emerging markets, has been a key driver for prime property markets. This trend looks set to continue with a forecast increase of 28% in the total number of UHNWIs around the world by 2023.

“One of the most significant changes from a year ago is the general trend towards increasing prices. In 2013, values fell in 39% of the locations featured, compared with almost 50% in 2012. Last year there was double-digit growth in 20% of markets. In 2012 this level of price rise occurred in just 15%.

“Cities in Asia-Pacific have, by and large, performed particularly strongly, although government cooling measures have pulled back growth in Singapore and Hong Kong.

“Another trend is the strong rebound of some of the markets like, Dubai (+17%), Madrid (+5%) and Dublin (+17.5%), that were hit hard by the global financial crisis.”

Shifts in wealth distribution contribute to changing fortunes in our Global Cities Survey, which measures the most important cities to the world’s UHNWI community.

Three-quarters of the 600 or so private bankers or wealth advisors representing around 23,000 UHNWI clients across the world questioned for the survey say the net worth of their clients increased in 2013 and around two-thirds (65%) say their clients are positive about their wealth creation prospects in 2014.

On average, 28% of the net worth of an Ultra High Net Worth Individual comes from the person’s main property and the 2.4 second homes they each own, on average.

Just over a fifth of UHNWIs are considering buying another home in 2014, while 15% are thinking about permanently changing their domicile of country of residence. Quality of life was cited as the main reason for wanting to make a move and the UK is the country people are most likely to head to.

Almost a quarter of UHNWI investment portfolios is accounted for by property and it is growing in popularity. Just over 40% of survey respondents say their clients increased their allocation to property in 2013 and 47% expect it to increase further in 2014. Residential property was the most popular area to invest in (54%), followed by commercial premises (34%) and agricultural land and forestry (12%).

Investors are now showing more of an appetite for risk, says the report. The withdrawal of stimulus measures such as quantitative easing may be one catalyst, but so is rising economic confidence, especially in North America and Europe.

“Investment decisions are destined to take on an increasingly adventurous flavour; and recovering European property markets, which were firmly off the radar two years ago, are seen by many as a key opportunity for this year and next.

The top six nations in the 2014 Global Cities Survey are the same as in 2013. The full top 10 list is: 1. London, 2. New York, 3. Singapore, 4. Hong Kong, 5. Geneva, 6. Shanghai, 7. Miami, 8. Dubai, 9. Beijing, 10. Paris.

But Knight Frank also lists the five fastest growing city hotspots, which feature Middle East and Latin American destinations. They are: 1. Sao Paulo, 2. Istanbul, 3. Abu Dhabi, 4. Mumbai and 5. Sydney.

“The number of centamillionaires – those with US$100m in net assets – has risen by 62%, while the tally of billionaires has climbed by 80% to 1,682, according to WealthInsight, a leading wealth intelligence firm, which has supplied data for the report.

Source: Adrian Bishop, Editor, OPP Connect

This Canadian Real Estate Blog was brought to you by BestHomesBC.com. Looking for a home to buy in Vancouver? Check out BestHomesBC.com for properties for sale throughout British Columbia. Looking for an assignment condo? Check out AssignmentsCanada.ca for pre-sale condos for sale in Canada.

Vancouver real estate prices break records

March 4th, 2014

Vancouver real estate prices are breaking records

The million-dollar club isn’t so exclusive in Greater Vancouver, where the average price for single-family detached houses sold has soared to a record high of more than $1.36-million.

Prices surged as total residential sales climbed to 2,530 last month for detached homes, condos and townhouses, up 40.8 per cent from volume of 1,797 properties changing hands in February 2013, according to data released Tuesday by the Real Estate Board of Greater Vancouver.

Detached properties have soared in value, rising to an average of $1,361,023 last month, an increase of $139,986, or 11.4 per cent higher than $1,221,037 a year earlier and smashing the previous high of $1,287,213 in January of this year.

But the board cautions that average prices give a skewed picture of the market because sales of many high-end homes boost the figures to well above other transactions that are considered more typical.

The board prefers to focus on the benchmark index price, which strips out the most expensive properties. On that measure, detached index prices reached $932,900 last month, up 3.5 per cent from February, 2013. On Vancouver’s West Side, the detached index price jumped 7.2 per cent to more than $2.14-million.

Over all, the index price hit $609,100 for Greater Vancouver detached houses, condos and townhomes sold on the Multiple Listing Service last month, or a hike of 3.2 per cent over the past year.

Sales volume last month was slightly lower than the 10-year average in what is shaping up to be a balanced market for sales and active listings in 2014, said board president Sandra Wyant.

The B.C. Real Estate Association noted that Ottawa’s shutdown of the federal immigrant investor program last month could reduce sales volume for the most expensive detached homes.

Dan Scarrow, vice-president of corporate strategy at Macdonald Realty Ltd., said he doesn’t think prices will change dramatically over the next several months, as long as interest rates stay low. If there is any slide in the housing market, it will be slow because prices are “sticky on the downside” due to the lack of major economic setbacks such as a huge spike in unemployment to force people to sell, he said.

The attraction of Vancouver remains high, including for wealthy immigrants from China, Mr. Scarrow said.

Greater Vancouver includes the City of Vancouver, the municipalities of West Vancouver and North Vancouver, and also suburbs such as Burnaby, Richmond, Coquitlam, Port Coquitlam, Port Moody and New Westminster.

In the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, residential sales climbed to 1,102, up 20.7 per cent from February, 2013. The index price for detached homes reached $558,100, up 3.2 per cent from year earlier. Average prices for detached properties rose 9.7 per cent to $644,574 in the Fraser Valley.

The index price for detached houses, condos and townhouses was $428,100 in the Fraser Valley last month, or 1.3 per cent higher than in February, 2013. The average price for those three categories reached $519,082 last month, or a 10-per-cent hike from $471,767 a year earlier.

Source: Brent Jang, The Globe and Mail

This Canadian Real Estate Blog was brought to you by BestHomesBC.com. Looking for a home to buy in Vancouver? Check out BestHomesBC.com for properties for sale throughout British Columbia. Looking for an assignment condo? Check out AssignmentsCanada.ca for pre-sale condos for sale in Canada.


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