The blistering pace of price growth in Vancouver is best represented by the latest numbers from Knight Frank Research, which showed that the average price of residential real estate in the city now far exceeds that of homes in the London or New York metropolitan regions.
The average cost of a home in Vancouver’s mainstream residential market is now C$917,800 ($694,934), compared to $617,700 in London and $467,900 in New York, reported Natalie Obiko Pearson and Katia Dmitrieva for Bloomberg
“Given the level of prices, it’s hard to imagine people in Vancouver earn enough [to buy homes],” Nomura International Plc. (London) senior economist Charles St-Arnaud said.
St-Arnaud noted that approximately C$1.5 billion to C$2 billion in foreign money is funneled into Canadian housing markets every month, a figure that might get affected by the B.C. government’s new 15 per cent property tax on foreign buyers.
“[When] you look at the economics, 5 percent of the transactions are with foreigners, and it’s always the marginal buyers that drive the price higher. If those marginal buyers disappear, the market price settles,” St-Arnaud argued.
While the tax has yet to be passed by the provincial legislature, the B.C. government can adjust the rate to fall within the 10 to 20 per cent range later down the line, and even apply it to B.C. markets beyond red-hot Vancouver, according to Knight Frank real estate consultant Kate Everett-Allen.
“[There] is no doubt that the new law will cool sales volumes and prices as foreign buyers absorb the additional cost implications,” Everett-Allen warned.
B.C. foreign buyer’s tax an ineffective show of force - analysis
Red flags of possible bubble burst now apparent in Vancouver - analyst