Metro Vancouver Real Estate Market Update December 2011
2011 was another strong, stable year for the housing market in BC as solid domestic demand and positive demographic shifts continued to buoy both prices and sales. The biggest gains were seen in the 5 municipalities of Vancouver, West Vancouver, Richmond, Burnaby, and White Rock. These 5 key markets averaged detached home price gains of roughly 20% in 2011. The remainder of municipalities in the Lower Mainland, along with cities and towns on the Island and in the Interior, has price growth charts that mirror the rest of Canada: from flat to 8%.
We believe the reason for the discrepancy between these 5 markets and the remainder of the Province can be explained by the settlement patterns of Mainland Chinese investor-class immigrants who choose to move to Canada. To qualify for this immigration classification, applicants must have a net worth of CDN $1.6 million, with investable assets of at least $800,000. Of these applicants, the majority are now from China, with 80% of those choosing to settle in BC because of its geographic proximity to China. And of those 80%, the majority is choosing to settle in the 5 municipalities listed above.
This is a pattern that BC has seen before. During both the Hong Kong and Taiwan immigration waves, certain neighbourhoods in Vancouver appreciated in value at much faster rates than the surrounding suburbs and the rest of BC. Eventually, however, the rest of the Province caught up as Sellers downsized or moved to other areas of the province, pushing up prices. This same pattern has yet to occur this cycle, but the influx of foreign capital is expected to counteract news of the fragile global economy.
In spite of the current global economy, migration and demographic patterns in BC will see roughly 35,000 new households created annually for the foreseeable future. Because of this, our survey found that most expect the 2012 BC Housing Market to be similar to 2011 in terms of sales and pricing. The one exception is East Vancouver, which is expected to outpace the rate of growth in BC in 2012 to narrow the gap with Vancouver’s Westside.
Despite all of this, every survey respondent had the same caveat: We live in an interconnected world, all bets are off if the global economy suffers a massive shock.
Merry Christmas and all the best in 2012!