The uncertainty during the pandemic has been responsible for a large increase in real estate prices, as demand continued to outstrip supply. While the summer months have been relatively quiet when compared to the beginning of this year, the fall market could be a very buoyant one, with prices moving up even more.
Lack of supply
There is a shortage of housing inventory – this is not a new phenomenon in Vancouver. The lack of supply has been a main factor that has been responsible for the month over month decline in sales numbers, and the situation will not get any better for the foreseeable future. This has left buyers with limited options to choose from, and will likely drive prices higher as more buyers enter the market.
Low interest rates
The Bank of Canada has indicated that it will not hike interest rates this year. Interest rates are at unbelievable historical lows, and this has tempted many potential homebuyers to enter the market. In the real estate market, when the cost of borrowing is low, activity typically remains high.
A considerable increase in immigration levels
The Canadian government has set record high immigration levels for the next few years, to address the serious labour shortage this country is facing. The goal is to welcome around 400,000 individuals per year over the next 3 years. Immigrants usually gravitate to major cities, and Vancouver is one of the most attractive cities drawing thousands of immigrants both from within Canada and overseas. We should expect a large surge of immigrants in the next few months as borders open up. Many will be homebuyers.
New wave of renters
The rental market in Vancouver will be impacted by new immigrants moving in, the influx of international students now allowed to physically attend school, and the return of tourism and hospitality workers wanting to be closer to work. More renters will mean a busy rental market and higher rents, leading to more investors purchasing condos. Condo prices should continue to rise.
Immigration from Hong Kong
There are around 300,000 Canadian passport holders in Hong Kong for whom Vancouver is a top destination choice. Many are selling their properties and moving to Vancouver due to the recent political activity there. Hong Kong is ranked as a city with one of the most expensive residential real estate market. This gives Canadian sellers in Hong Kong enough capital to enter Vancouver’s already expensive market, which could drive prices up even higher.
Vancouver’s real estate market is looking very positive and prices will continue to rise. If you are thinking about getting in or out of the market, contact us and leverage the benefit of our decades of experience and trusted advisors.