A sold sign stands in front of a house in the 2000-block West 13th Avenue in Vancouver that sold for $3.2 million on Oct. 16.
The price of luxury homes in Vancouver continues its skyward march, placing the city tops on yet another global real estate list.
Prices of Vancouver’s “prime” real estate, defined as the top five per cent of the housing market, surged by 20.4 per cent between September 2014 and September of this year, surpassing 33 other cities around the world,according to a new report by London-based international real estate consultants Knight Frank.
The price increase corresponds with tighter supply, with the number of homes for sale down 32 per cent and comes as “local demand is strengthening alongside foreign interest.”
Sydney and Shanghai placed second and third, also recording double-digit annual growth at 14 per cent and 11 per cent, respectively. But overall growth in the luxury real estate segment has slowed significantly, from seven per cent two years ago to two per cent this year, the report said.
Recent data from Vancouver real estate firms active in the local luxury homes market show similar findings.
According to Sotheby’s International Realty, sales of Vancouver homes in the $4-million range rose by 71 per cent in the first half of 2015, while sales of homes over $3 million in Greater Vancouver jumped 79 per cent over the same time period, said a report from RE/MAX.
David Eby, MLA for Vancouver-Point Grey, represents a west side riding where streets are lined with multi-million dollar homes. Yet in one of the wealthiest ridings in the region, many of his constituents are amazed at the continued climb of their home’s assessed value — as well as corresponding property tax hikes — and worried about affordability in the region.
“They’re just absolutely blown away by what is happening to the market,” said Eby. “It has no connection for them, and keep in mind these are doctors and business people who are relatively wealthy and ... (real estate prices are) still disconnected even from their income levels.”
With Vancouver homes now a hot commodity globally, prices could keep spiralling up, added Eby, calling on senior levels of government to start collecting data on real estate buyers and take a hard look at the issue.
“We’re still lower than places like London and New York and Hong Kong. There’s still lots of spaces for prices to continue to rise and have a knock-on impact on the value of other homes in the Lower Mainland.”
The trickle-down effect of a soaring luxury homes market on prices in the rest of the region is up for debate. The argument is that buyers who are priced out of Vancouver’s tony west side are now moving east and south in Vancouver, which pushes other buyers out into the suburbs, resulting in a lack of affordable housing across the region.
The benchmark price of a single-family detached home in Vancouver’s west side rose 20 per cent to $2.77 million compared to last year. Other areas also saw significant year-over-year increases, including East Vancouver (23 per cent), Richmond (23 per cent), North Burnaby (24 per cent) and Tsawwassen (26 per cent).
Cameron Muir, chief economist of the B.C. Real Estate Association, said the price jumps are reflective of the high demand and low supply of single-family homes across the region, and have little to do with luxury home prices.
The luxury housing segment makes up only two per cent of the housing market in Metro Vancouver, said Muir. “It’s really nothing to do with everything else.”
Muir said less than two per cent of the sales in Metro Vancouver were priced over $3 million, and nearly 80 per cent were below the $1-million mark.
As densification builds and most housing starts today are for multi-family dwellings, single-family homes become scarcer, driving up their value.
“When we look at affordability in Vancouver, we have to look at the housing stock itself, not what homes are looking like in Point Grey.”