Vancouver’s luxury housing market has experienced significant gains over the summer and that trend is forecasted to continue into the fall.
Sales of detached homes and condos worth over $1 million rose nearly 70 per cent in July and August in Vancouver, and homes worth over $4 million rose 50 per cent. Foreign investors from Mainland China are partial contributors to the boom.
Sotheby’s International Real Estate released the findings on Wednesday. Managing Broker Polly Cordwell said that while other factors did contribute to the sales growth, she believes we need more accurate numbers on foreign buyers.
“I definitely welcome the fact that the government is going to be looking at that. I think it’s something that we should at least be able to understand better exactly what the implications are of that,” she told Vancity Buzz.
“Obviously affordability is an important thing for the residents of Vancouver, so I think that’s a great first step.”
Limited supply of luxury homes in traditionally upscale neighbourhoods means buyers are looking in East Vancouver, along the Fraser River and in South Vancouver for alternative options. Cordwell said it’s unusual to have such a hot market in the summer.
Foreign investment is largely rooted in the luxury home market, and it’s unknown whether it has a trickle-down effect for consumers looking for more affordable options. She said it’s all speculation until the government does some research and grabs firm numbers.
For her part, Cordwell doesn’t believe the Vancouver housing market is going to crash anytime soon and that we will remain in a seller’s market for the foreseeable future.
“I think it’s pretty stable. There’s been a lot of talk about there being a bubble here in Vancouver and that’s been going on for such a long time. At what point do we stop saying that we think there’s a bubble,” she said.
“There are so many reasons why people want to own real estate here and I don’t think that any of those things will be changing.”
RE/MAX also released a survey earlier this month saying buyers from China were responsible for a 79 per cent increase in luxury home sales.
Because of the difficulty of breaking into the market, many young people are turning to their parents to borrow the money for a down payment on a house. Real Estate Weekly found that 75 per cent of young buyers looking to break into the market will ask their parents for a loan. The survey was based on a modest sample size of 400 people.
It’s not just difficult to buy a home in Vancouver. Renting is also a major issue, with the city having the worst affordability in the country, according to the Canadian Rental Housing Index. They say one in four renters are spending 50 per cent or more of their income on rent.