Out of 17 cities, Vancouver is said to have the highest risk that housing prices could drop suddenly.

Out of 17 cities, Vancouver is said to have the highest risk that housing prices could drop suddenly.
Photo Credit: Jonathan Hayward/Canadian Press/file photo

Vancouver has highest risk housing bubble will burst

The Swiss bank UBS has rated Canada’s western city of Vancouver as having world’s greatest risk of a sudden downward correction in its housing market. However, the assessment came before a new tax was imposed that cooled the housing market somewhat.

The bank’s report warns investors are less likely to see growth in the value of their properties in cities that have a high “bubble risk.” London, England was rated as having the second highest risk.

House prices in ‘overdrive’

UBS says that homes in Vancouver have been overpriced since 2007, but prices went into “overdrive” in the last two years. It credits the trend to a high demand from foreign investors, low interest rates for mortgages and the low value of the Canadian dollar.

After the government imposed a 15 per cent tax on foreign buyers in Vancouver in August sales fell 26 per cent compared to the same month in 2015.

The average price of a detached home in August was $2.6 million.

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