The continuing boom in the Vancouver real estate market has made Vancouver housing one of the most expensive in the world. According to recent research, Vancouver is the third most expensive place to buy a home in the English speaking world. Vancouver only outdone, by Hong Kong and Sidney, Australia, is by most measures more expensive now than San Francisco or New York.
One of the most important reasons for the high prices in the real estate market in Vancouver is the huge interest among Asian investors from overseas. According to experts, Vancouver is one of the most appealing places to live for Chinese buyers in particular.
Most of the international investment is coming from mainland China. Vancouver boasts a large Chinese population, a mild climate and a solid educational system, not to mention a beautiful marine coastline. After Toronto, Vancouver has the largest Chinese immigrant population and this is obviously very appealing to other Chinese investors and new immigrants.
According to real estate surveys, the sale of detached homes, as well as condos and townhomes has skyrocketed over the past year. Up from twenty-five percent this year from last year and up a whopping 70% from January to February of this year alone. Sales rose even further in March, with a 32% jump from the preceding month. Today, sales are up by approximately 80% from two years ago.
Vancouver’s median home price is about 602,000 dollars Canadian, which is almost ten times higher than the median household income (63,100). According to economists, anything over three times the median household income is generally considered unaffordable.
What this means is that Vancouver is now considered to be ‘seriously unaffordable’ for most Canadians. The U.S. by contrast is considered to be only ‘moderately unaffordable’ as the median home cost to income is only a multiple of 3.3.
Vancouver, by these measures proves to be not only more expensive than its Southern neighbour, including high price markets like San Francisco and New York, but also more unaffordable than one of the most notoriously expensive real estate markets, London, England.
For regular Canadians hoping to buy their own home in the Vancouver region, this market makes this dream a real challenge. Many Vancouverites are extremely frustrated by this scenario. According to many, housing prices in this region are simply out of control.
In other cities that have been home to huge amounts of foreign investment in real estate, such as Sidney, Australia, controls have been placed upon the amount of foreign home ownership allowed. According to some, this is something that the British Columbia government would also be wise to consider.
Increasing property transfer taxes for non-Canadians would be one simple way of doing this. However, the impetus for stepping in and controlling the real estate market is pretty slight among officials.
Vancouver residents themselves however would be happy to see some sort of regulation or control of the market. As younger people seek out their own homes, the exorbitant prices make excess financial burdens and unbearable debt loads an increasing reality.
Most of the Chinese investment is taking place in Vancouver’s Westside. The median price of a home here averages about two million dollars. The area is graced with beaches and parks and boasts a variety of large scale homes and mansions. The best areas herein, include the desirable neighbourhoods of Point Grey, Dunbar and Shaughnessy.
UBC is also found in the Westside and this is another attraction for Chinese families with children. According to one Point Grey realtor, this area has already seen fifty sales this year alone which is a huge amount by real estate standards. Fifty percent of these sales were to Chinese investors from mainland China.
Some investors are even willing to pay way more than the asking price, sometime up to almost two hundred thousand more. With the intense competition for housing, it is little wonder that many are willing to shell out more to get in on the action.
As land prices increase, there is also a trend to buying the property only to tear down the house and begin anew. Since so many of the houses were built during the boom in the 1940s and 1950s, a good deal of the houses on the market are outdated by modern day standards. They are avoiding the emergency plumber, gas leak or structural break by updating their home before they move in.
New plumbing, toilet repair, electrical and other additions considered to be necessities, mean that many of these houses are being demolished in order to build newer, more updated homes. And while this may prove a loss to the look of more traditional, smaller scale architectural design in favour of more modern style mansions; it is also serving the construction industry quite well.
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As many architects can attest, they’ve never been busier. Many firms are seeing more than two-thirds of their business coming from Asian immigrants. Interior renovations are also providing big business, with newer modern amenities increasingly being sought out. Many homes being built for the Asian market now have two kitchens, one larger kitchen and one smaller ‘wok’ style kitchen.
Most of the gains have thus come to Vancouver West. The area has seen a rise in home prices of about 77 percent over the last half a decade. People of South Asian and Chinese ancestry apparently make up approximately sixty percent of Richmond residents. The area continues to be a major focus of Hong Kong immigration and has been for the last two decades.
While many Canadians remain shut out of the Vancouver market, the market itself shows no sign of slowing down. The continued rise in housing prices may make the area largely unaffordable for many, but unless controls are put on foreign investment, the prices will likely continue to rise.
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