Vancouver defies expectations as overseas housing markets cool
Posted July 4, 2017 6:26 am.
Last Updated July 4, 2017 7:23 am.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – It is the million dollar question in our real estate market — or maybe the two or three million dollar question — when will Metro Vancouver’s housing bubble burst?
Other hot global markets have been hit by a drop in Chinese investment in 2017 but the local housing scene seems to keep defying expectations, according to a story featured recently in Business Insider.
“Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales,” writes Daniel Wong.
“New Zealanders who were complaining about a ‘flood’ of Mainland Chinese buyers, are now complaining about the market cooling faster than expected. Australia’s leading property analyst is now telling people to prepare for a 10 per cent drop in prices soon.”
But Wong — who is a contributing editor for Better Dwelling – says Vancouver is “the one place that’s bucking the trend, where locals are still convinced that Mainland buyers are somehow buying — but not showing up in any significant statistics. Good luck with that Vancouver!”
He believes that while Chinese investors were buying a lot of international real estate, “over-excited locals” bought into the narrative way too much.
“Countries that are nice, but not global leaders got way too excited that they were the next ‘New York.’ Canadians after all, have been heavy real estate speculators without Chinese influence. Now that mainland Chinese buyers aren’t buying in any significant quantity, buyers are finding themselves in an existential real estate crisis,” he writes. “Is a 30 percent rise in a single year a justifiable increase in property prices? We’ll find out.”
But at least one local realtor and blogger sees nothing but price increases in Vancouver’s near future, even as sales in the city’s luxury segment have dropped since introduction of a 15 per cent foreign buyers’ tax last year and China has clamped down on capital outflows.
“There seems to be a slow down at the higher end. We’ve seen that not only in sales but in terms of the actual dollar volume spent,” says Steve Saretsky with Sutton West Coast.
“To put that into context, the amount of dollars spent on Vancouver homes above two million dollars has dropped five per cent while the total dollars spent on homes above three million dollars in Vancouver has dropped 12 per cent,” he tells NEWS 1130.
But Saretsky says the broader housing market in Metro Vancouver has seen no impact.
“Access to credit is still readily available, we are still seeing a lot of speculation and there is still very low inventory so nothing has really changed in terms of the overall environment of the market.”
Saretsky says it might be a typical realtor’s response, but all the data he is seeing right now hints at further increases in prices.
“That’s solely based on the inventory being at an all time low, particularly in the condo market, and demand is still red hot.
In 2017, Vancouver condos have been increasing at 2.2 per cent per month. The environment is set for prices to continue to go up.”
But whether or not that will actually happen, he says, is anybody’s guess.