CBRE, one of the world’s largest commercial real estate and investment firms, has released its latest Global Living report, which examines the housing markets in 35 global cities.
One of the big takeaways is housing prices continued to grow in all but five of the 35 cities analyzed.
Additionally, four of the cities saw double-digit growth, including Barcelona, Dublin, Shanghai, and Madrid.
What comes as little to no surprise, Hong Kong and Singapore ranked as the most expensive cities in the world to buy a house, with average prices going for $1,235,220 (USD) and $874, 372 (USD) respectively.
Trailing behind them in third is Shanghai, where homes cost an average of $872,555 (USD).
According to the report, in 2018, some of the best performing cities were New York, Los Angeles, Toronto, Vancouver, Sydney, and Melbourne.
“With these markets now suffering from increasing affordability constraints, they have been pushed down the list making room for European cities where house price growth is still robust,” reads the report.
For the second year in a row, Vancouver ranked as the fourth most expensive housing market in the world, with homes costing an average of $815,322 (USD).
The only other Canadian cities to make it onto the list are Toronto in 12, with homes costing an average of $575, 557 (USD), and Montreal in 26, with houses costing an average of $260,084 (USD).
Additionally, Vancouver ranked as the sixth city in the world for rental growth during the same period.
“Demand for residential properties in Vancouver is high and the market remains strong, with nearly 22,000 housing completions in 2017, up 20% on the 10-year average,” reads the report on Vancouver. “However, there remains a supply and demand imbalance as Vancouver’s population continues to grow at a rapid pace.”
According to CBRE, the popularity of Vancouver as a place to live and work has made the city one of North America’s most expensive.
Affordability constraints are severe in Vancouver and have led the provincial government to implement a number of cooling measures.
These include an increase in the foreign-buyers’ tax to 20%, an empty homes tax equal to 1% of a vacant property’s assessed taxable value and an increase in property tax rates for homes assessed above $3 million ($CAD).
These measures, paired with an increasing interest rate are having a “noticeable impact” on the market, according to CBRE.
Annual house price growth was 4.1% year on year in August 2018, down from an average of 9.3% per annum over the last decade.
The lack of housing affordability has definitely put pressure on the rental market, where demand is strong and vacancy rates are low.
According to the report, the average monthly rent in Vancouver is $1,042 (USD), which works out to be roughly $1,400 in Canada.
In 2018, rental growth was 6.8%, up from an average of 4.8% between 2008 and 2017.
However, these tight market conditions are attracting more development to Vancouver’s rental sector, with 6,000 purpose-built rental units under construction at the end of Q3 2018, a historical high, according to CBRE.