The average price for a detached home anwhere in the Vancouver region rose 30 percent to $1.4 million, while the median family income in metro Vancouver was just $73.900, forcing many people out of the market, and out of the city, even out of the region.

The average price for a detached home anwhere in the Vancouver region rose 30 percent to $1.4 million, while the median family income in metro Vancouver was just $73.900, forcing many people out of the market, and out of the city, even out of the region, weakening the local economy
Photo Credit: Rafferty Baker/CBC

Canadian house price increases: bad for cities and price rise spreading out

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The ever-present concern of skyrocketing house prices in major cities now has at least one mayor very concerned.

Vancouver mayor Gregor Robertson says high house prices and rents are driving families, the young people, and pensioners out of his city.

He recently issued a statement of support for a house flipping tax (buying a house then quickly putting it back on the market for a higher price) and a luxury sales tax. This is designed to target foreign investors and offshore money.  He hopes this would help rein-in the excesses of the Vancouver super-heated housing market.

“Houses need to be homes, not treated as commodities” he said, even as the Real Estate Board of Vancouver released figures showing prices for detached houses rose a whopping 37 percent since last year.

Gregor Robertson says he’s worried Vancouver’s economy will suffer if the provincial and federal governments do not legislate new taxes to stall ever-rising house prices in the city.
Gregor Robertson says he’s worried Vancouver’s economy will suffer if the provincial and federal governments do not legislate new taxes to stall ever-rising house prices in the city. © CBC

It is also now quite common for buyers to engage in bidding wars to get a house which very often sells for far more than the original asking price.

Pushing people out of the city

“These trends are not sustainable and we need to be wide awake to the risks they pose to the stability of our economy, let alone the impact they have in pushing local residents, especially young people, families, and seniors, out of our neighbourhoods,” said Robertson.

An OECD report  recently warned that Vancouver’s economy could suffer due to rising household debt and as mostly offshore speculators and high prices push people out of the city.  “With unregulated, speculative global capital flowing into Metro Vancouver’s real estate, we are seeing housing prices completely disconnected from local incomes,” said Robertson.  (Another article noted that in Toronto, the high prices have pushed people out to surrounding areas where those prices are now often rising even faster.)

The average housing price in Toronto and surrounding area reached $622,217 in 2015, up 9.8% from 2014. It marks the 19th consecutive year of increases, according to Toronto Real-Estate Board figures. But average price for a detached house in Toronto was about $1.2 million
The average housing price in Toronto and surrounding area reached $622,217 in 2015, up 9.8% from 2014. It marks the 19th consecutive year of increases, according to Toronto Real-Estate Board figures. But average price for a detached house in Toronto was about $1.2 million © CBC News

Although foreign money is often blamed for the speculation, there is little agreement on to what extent Vancouver housing is foreign-owned.

In February the British Columbia provincial government announce a plan that would require homebuyers to  disclose their citizenship.

While Toronto Ontario house prices (and the surrounding area) also continue to skyrocket, foreign investment now seems to have also moved to Montreal.

In April a Journal de Montreal story said that rich Chinese are now the major buyers of condos and buildings in the city.  The article says up to 80 per cent of some condo towers in the city have been bought by Chinese.

This duplex for sale in the Outremont borough of Montreal is listed for just under $2 million
This duplex for sale in the Outremont borough of Montreal is listed for just under $2 million © remax

The article aslo notes they pay cash, hundreds of thousands of dollars or more, in spite of the fact that Chinese are only allowed to take a maximum of $50,000 out of the country per year.

William Malkinson, a notary, who says his business is flourishing because of the new money addss “Montreal is a haven of peace and a secure spot to place money outside of China”.  He adds, “They find a (building) project or a neighbourhood they like and they buy everything”.
In addition, more Chinese are buying houses in the borough of Westmount, which has always been the most expensive part of the city.

It also seems the increasing house price phenomenon is spreading to medium-size cities.

Hamilton Ontario, near Toronto, saw a big house price jump in 2015, over 16 percent from 2014.

This house in Windsor Ontario sold for $20,000 more than the asking price and in the first day it was listed.
This house in Windsor Ontario sold for $20,000 more than the asking price and in the first day it was listed. © Amy Dodge/CBC)

Windsor Ontario, across from Detroit is suddenly becoming a hot market, for no discernible reason. Bidding wars are becoming common and realtors are advising buyers not to attach conditions to their offers but instead be ready to buy as soon as a house is listed.

“I’ve been doing this for 24 years and I’ve never seen this market like this,” said Windsor realtor Randy Standel in a quote by the CBC.

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One comment on “Canadian house price increases: bad for cities and price rise spreading out
  1. Avatar singasongdong jongkong pong says:

    please let the market forces dictate the house price and don’t internvene as it will only make situation worse.
    Chinese tried intervening this in the shanghai stock index earlier this year to stop it falling and it kept going down , soon as they left it slonr it rose.
    A natural disaster like the expected earthquake due in 5 to 15 years from now will promptly correct the market price for the land on which these houses sit.