High immigration to Metro Vancouver and continued low interest rates will keep the regional housing market strong

Thursday, November 17th, 2011

Three Different Forecasters, One Basic Forecast

Frank O’Brien

High immigration to Metro Vancouver and continued low interest rates will keep the regional housing market strong this year and into 2012, a Vancouver Board of Trade (VBT) panel discussion on housing was told last week.

The VBT panel was moderated by Dave Podmore, CEO and chairman of Concert Properties and made up of Real Estate Board of Greater Vancouver president Eugen Klein; Richard Wozny, of research and consulting firm Site Economics Ltd.; and Ward McAllister, CEO of developer Ledingham McAllister Properties Ltd.

Eugen Klein looked at the resale residential market in and noted that the resale housing market has turned into a buyer’s market in most of the Lower Mainland. “Supply is outpacing the demand,” he said.

The exception is found in three markets: Richmond, Vancouver West and West Vancouver. Average detached house prices in these markets in the past year have risen by $200,000, $400,000 and $275,000, respectively, he said.

Between January and September of this year, he noted, there were 953 houses sold for $2.5 million each. “This is almost as much as in the three previous years combined.”

Klein said that internal Board polling of members shows that from 10 per cent to 12 per cent of all home buyers this year are moving into Greater Vancouver from outside of Canada, but only 3 per cent are foreign investors who don’t plan to live here.

Wozny warned that Asian buyers may not continue as a market force.

“China is seeing a property bubble,” Wozny said. “Sixty million homes remain vacant in China and hundreds of millions of square feet of office and industrial are vacant, all just speculative.”

Yet Wozny said, that “given [historically] low interest rates, my verdict is, there is no bubble in Vancouver.”

McAllister was also bullish on the new home market. He said Canada Mortgage and Housing Corporation forecasts are for 17,000 housing starts in Metro Vancouver in 2012, 14,000 of which will be strata units. But, forecasts also call for 52,700 people moving into B.C. this year and a further 61,000 in 2012 and most of these will move into Metro Vancouver, estimated at 42,000 this year and 46,000 next year. The federal government, estimates that immigration to B.C. will average 60,000 people a year over the next five years.

This means annual demand for at least 17,000 new homes in Metro Vancouver from immigrants alone, McAllister said.

McAllister also had some advice for those baby boomers who think it is time to sell their Metro Vancouver house before all the other boomers get the same idea; “Don’t.” According to McAllister, if you sell your house now “you may never get back into the market.” 

© 2011 REW

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