Vancouver’s real estate market won’t cool down any time soon – and Britain’s vote to leave the EU may drive more foreign buyers here, according to Royal LePage.
“Economic and social disruptions have rocked the world once again, introducing new risks and making it very likely that the Bank of Canada will leave interest rates as is for now,” said Phil Soper, president and CEO of the real estate company, in a release.
“Few industries are as rate-sensitive as real estate. We don’t see even a mild correction for either the Toronto or pistol-hot Vancouver markets in 2016.”
According to Soper, Canada’s historically low interest rate environment has fuelled the Vancouver’s real estate market growth in recent years.
As that continues due to market uncertainty over Brexit, such low-cost borrowing will delay the “cyclical cooling” that had been predicted for the second half of 2016.
However, said Soper, while Britain’s exit from the EU will drive more foreign money into Canada’s “safer” real estate markets, that may not directly impact home sales.
“We anticipate the impact, if any, will be seen in the commercial property sector and not in housing markets,” said Soper.
“Beyond Europe, our research does point to increasing Vancouver and Toronto region foreign buyer activity in residential markets this quarter.
“Canada remains a favoured nation for the world’s real estate investors.”
In a poll of Royal LePage real estate advisors working in Greater Vancouver, 74% said that year-over-year home purchases by foreign buyers have increased in the second quarter.
However, 37% of those advisors polled said they believed foreign ownership still makes up less than 10 per cent of the Greater Vancouver housing market.
According to Royal LePage, in the second quarter of 2016, Greater Vancouver home prices shot up by a huge 24.6 % compared to this time last year – making the median price of a home now $1,098,599.
Likewise, in the City of Vancouver the median home price skyrocketed by 27.5 % to $1,330,531.
The effect of the huge cost of buying a home in Vancouver now seems to be influencing what kind of home people are buying, said Soper.
“The quest for affordability in Vancouver seems to be influencing consumer housing type choices.
“Alongside skyrocketing prices of single-family homes, we have seen an uptick in the rate of price appreciation for condominiums over 1,000 square feet, when compared to smaller units in this market.
“This may indicate that families being priced out of the single-family detached home market in Vancouver are looking upwards to condominiums.”