Strong market fundamentals are keeping B.C.’s residential real estate among the most expensive in the country.
A Royal LePage report released last week found that the price of a standard two-storey house and detached bungalow in Vancouver sold for nearly three times the average national price in 2011’s first quarter. It cited limited housing supply and low interest rates as key price drivers in the traditionally strong spring real estate market.
The BC Real Estate Association noted the higher prices in February were due to higher sales in the city’s more expensive communities, but even excluding those sales, Metro Vancouver house prices continued to rise 4%.
Strong demand for housing in B.C. due to strong net migration into the province remains a key market driver. According to Statistics Canada, immigration has displaced interprovincial migration to B.C. as the main contributor to the province’s adult population growth. Since 1990, of the one million new residents to B.C., more than 777,000 were immigrants.
Carol Frketich, regional economist for the Canada Mortgage Housing Corp. (CMHC), said housing starts outpaced household growth during the economic boom leading up to the global financial crisis. However, since 2008, “the level of population demand is a little higher than the level of new-home construction. There is a gap there.”
CMHC and StatsCan data suggests that by the end of 2011, the number of new households would be at the same level as the number of new homes in B.C.
That could add to the challenge of housing affordability in the province, especially in Metro Vancouver. While the recent economic downturn reduced housing prices, it was short reprieve for buyers seeking homes in the Lower Mainland.
Tsur Somerville of UBC’s Sauder School of Business said B.C. also attracts more affluent immigrants than the rest of the country.
According to BC Stats data, approximately half of Canada’s investor-class immigrants have come to B.C. over the past 20 years.
Bill Binnie, broker and owner of Royal LePage North Shore, noted that part of the strength in the market thus far this year was due to a notable increase in buyers from China, most of which, anecdotally, he suggested were immigrant first-time home-buyers moving their families to B.C.
“There were more Chinese buyers from the mainland than there usually would be, so there was a bit of a boom from that market.”
(See Peter Ladner’s At Large column, page 28.)