Vancouver home prices increased by nearly 50 per cent in seven years: CMHC
'Conventional' factors like mortgage rates, income level and population changes account for about 75 per cent of the price increase, says report
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Vancouver home prices increased by 48 per cent between 2010 and 2016, according to a new report from the Canadian Mortgage and Housing Corporation.
The report’s authors noted that 75 per cent of that price increase could be explained by “conventional” factors such as low mortgage rates, population and disposable income. Several housing experts took a crack on what caused the other 25 per cent.
UBC sociology professor Nathanael Lauster says much of it can be explained by supply constraints – developers are not able to build as much or as quickly as they would like to meet the demand for housing.
Vancouver is running out of industrial land to turn into residential housing – like it did with False Creek – and many urban planners do not want to encourage urban sprawl. But densifying already dense neighbourhoods could displace perfectly good rental housing, said Lauster. He says the city should re-zone parts of Vancouver’s single-family neighbourhoods, which make up about 75 per cent of the city’s land.
The CMHC report noted that almost all of the growth in price came from single-family homes, as opposed to condos or townhomes.
Tom Davidoff, an economist at UBC’s Sauder School of Business, says market psychology could also explain housing-price increases in that seven-year time frame.
“It could be short term rentals, foreign buyers, or investors from somewhere else in Canada,” he said.
“People could be very bullish in Vancouver.”
The CMHC report highlighted that both Toronto and Vancouver had more trouble building enough new housing to keep up increased demand, compared to smaller cities.
Davidoff said that’s not surprising, because desirability and restrictions on development often go hand in hand in big cities.
“Throughout the world those two things tend to go with each other. People tend to like oceans and mountains, and nice liveable places tend to be pretty regulated,” he said.
Like Lauster, Davidoff thinks local authorities need to ensure housing can be built more quickly.
The experts were two of eight Vancouver academics that CMHC asked to review the report last year.
But at least one critic says the report is missing an important piece when it comes to price increases – the presale condo market.
Andy Yan, director of SFU’s City program, pointed out some condos are flipped before they are even completed, increasing prices before people who plan to live in them can buy them.
“The issue of flipping and assignment sales was not touched on [in the report]. That as a driver is something that needs to be examined,” he said.
“These units were unaffordable since birth.”
Yan has previously released an analysis of Statistics Canada data that showed non-residents own about 10 per cent of Vancouver condos.
The B.C. NDP has said it plans to roll out significant housing affordability measures in the upcoming budget, but that it won’t include a foreign buyer ban, despite the B.C. Green Party calling for one.