When it comes to prime house price growth, Hong Kong and London are out, Vancouver is in. According to Knight Frank’s annual Wealth Report, the West Coast Canadian city saw a 25% jump in house prices last year—the greatest of any world city. “It’s like the wild west,” said realtor Christopher Boyd of The Rennie Group. “Everything is going to multiple offers.” More:Vancouver Leads Global Markets in Housing Price Growth Last week, an 88-year-old home in the prestigious Point Grey area listed for $7.888 million, and sold for just over $9 million—almost $1.2 million over asking price. The successful bid was one of 11 all-cash, no-condition offers received, according to listing agent Bo Park of Sutton Westcoast Realty. Overall, sales of detached properties surged last month, reaching 1,778—a 37.2% increase compared to the same time last year. The benchmark price for detached properties increased 27% to $1,305,600. Why the bull market? For starters, Vancouver is an appealing city known for its cherry blossoms, picturesque streets and temperate Pacific Rim climate. In fact, The Economist ranked British Columbia’s largest city as the third most liveable in the world. Vancouver’s low property taxes are likewise appealing. “The holding cost of an investment in Vancouver is relatively low,” said Tsur Somerville, a professor at the University of British Columbia’s Sauder School of Business and the director of UBC’s Centre for Urban Economics and Real Estate. Last year, the City of Vancouver’s residential tax rates were $3.54 per $1,000 of a property’s taxable value. More:Chinese Crave Vancouver’s Luxury Homes There’s the issue of limited supply, especially in the high-end. According to the Real Estate Board of Greater Vancouver, the sales-to-active listings ratio for February 2016 is 57.2%, with 7,299 total properties listed via the Multiple Listing Service system in Metro Vancouver as of March 4. This represents a 38.7% month-over-month decline. Finally, there’s the matter of foreign dollars entering the market and further driving demand. Many believe most of the outside money is coming from mainland China, but it’s hard to know for sure. “The problem is, we don’t measure accurately who’s buying what for whom, so this is inherently speculative,” said Somerville. In February, the government of British Columbia announced it will begin collecting information about the citizenship of individual home buyers, and also compel directors of corporations purchasing land to disclose citizenship. More:Vancouver’s International Appeal “People disagree about how important China is for Vancouver housing prices, but I don’t think anybody disagrees that the west side fancy houses are being driven up by Chinese demand,” said Thomas Davidoff, a professor and real estate economist at Sauder. “Just as the [Canadian dollar] weakened relative to the yuan…that’s just when prices have exploded.” Toronto and Montreal are also faring well: A recent Sotheby’s report predicted the Greater Toronto Area will lead the $1 million-plus residential real estate market into spring of this year. But, Somerville says, Vancouver is in a class of its own. Last week, the Royal Bank of Canada released a report calling both Vancouver and Toronto markets “dangerously unaffordable,” but went on to note that conditions in the eastern city “are not as extreme as they are in Vancouver.”
For Davidoff, “The difference between Toronto and Vancouver is Toronto is a good place to make money. I would say Vancouver is a good place to have money.” Toronto’s robust market may be justified based on what its residents are earning, he further explained, but he is “more concerned about Vancouver prices.” To counterbalance the price hikes seemingly caused by foreign investment, Davidoff and Somerville drafted a policy proposal that calls on the provincial government to tax property owners who don’t contribute to the local economy with a 1.5 percent surcharge on vacant properties. “As an economist and somebody who’s worked in the States, when I got here it was just obvious that our income taxes and sales taxes are too high, and our property taxes are too low,” said Davidoff.
On the Market in Vancouver
Price: $5.95 million
Bedrooms: 4
Bathrooms: 4.5 This Point Grey property was originally built in 1941, but has since been extensively renovated and features ocean, mountain and city views. View full listing
Price: $2.9 million
Bedrooms: 4
Bathrooms: 4.5 Enjoy 360º views of Vancouver and surrounding environs from this nearly 3,000 square foot penthouse on Alberni Street. View full listing
Price: $4.3 million
Bedrooms: 3
Bathrooms: 3 Adjacent to the Vancouver waterfront this 2,500 square foot townhouse features 12'+ ceilings and expansive balcony and terraces. View full listing