A new study of Vancouver’s real estate published in the Georgia Straight has preliminary results indicating that while investment from offshore is impacting home prices in Metro Vancouver, the impact is far less than many think.
The two researchers, Simon Fraser University’s Andrey Pavlov and University of British Columbia’s Tsur Sommerville analyzed price changes in certain Vancouver neighbourhoods for three months after the July 2012 end of the federal immigrant investors program.
This program which ran from 1986 to 2014 allowed immigrants to move to Canada in exchange for a five-year loan to the federal government of $800,000. Approximately 120,000 people used this program to move to British Columbia.
The researchers found that when the program closed, property prices in the neighbourhoods studied declined by 2.5 per cent. However, the benchmark price for all residential properties in the region increased by 48.3 per cent from 2012 to 2015
The Georgia Straight’s reporter Travis Lupick stated in the article “Pavlov listed a number of other factors he suggested are contributing to Metro Vancouver’s hot market. He said those forces include low mortgage rates, low property taxes, burdensome development-permit processes, and infrastructure shortcomings that slow the construction of housing throughout the larger region. He also did not discount the impact of foreign money, stating that it certainly has an effect, though exactly how great remains unknown. (On June 15, the Straight reported that speculative buyers also likely have an increasingly strong hand in the Vancouver market.)
An earlier March 2016 study by the City of Vancouver found that single-family and duplex homes have a vacancy rate of just one percent, suggesting that foreigners living abroad are not buying homes and leaving them empty, as some reports have suggested.”
We are now starting to get some well researched studies on what is going on in the single-family housing market and why. The conclusions of this research work will be published in academic journals and should be available in the next few months.