The extensive Conference Board of Canada study of Greater Vancouver has determined foreign buyers have at least some influence on the real estate market.
Data is clearly lacking to determine the extent of the issue but the report says its clear that “outflows of wealth from China have at least some influence on the
Greater Vancouver housing market.”
With what data it could crunch the Board determined a substantial number of real estate buyers somehow do not seem to need local jobs or a mortgage to buy up properties.
It also notes that when the Chinese economy is surging, as it has in the past, its residents have the wealth to buy up Vancouver housing.
The report notes with the Chinese economy slowing it could mean a cooling down of Vancouver’s real estate but just not this year.
The Conference Board says Statistics Canada, Canada Mortgage and Housing Corporation, and even the BC Government are now gathering much needed data on foreign buyers.
It adds the high cost of housing is exacerbated by Vancouver’s mild climate, its location, and the scarcity of land.
With today’s report highlighting how housing affordability is plaguing Greater Vancouver, the question is what to do about it?
The report says one solution is for real estate prices to be curtailed by either reducing demand or increasing housing supply.
If it is foreign buyers driving up prices then the report says one option is to restrict the ability to buy for non-residents as has happened in Australia and Denmark.
Although it notes that approach can be controversial.
Another solution floated by the report is for significant pay hikes, pointing to the region’s low household after-tax incomes when compared with 20 other regions.
However that’s easier said than done, as the report says to reach the average price-income ratio housing prices would have to be cut in half or local incomes would need to double.
Or if you compare Greater Vancouver to Toronto this region’s housing prices would have to drop by a third or average incomes increase by almost 50-percent.