Anyone watching Vancouver’s housing market knows that peaks and valleys have been part of the trend for the past three years.
After the Canadian government bid adieu to the Immigrant Investor program in March, housing prices fell by 11 percent. However, Vancouver’s HPI (Home Price Index) remains steady. Moreover real estate board chief Ray Harris called Vancouver’s market conditions “steady and stable.”
So what’s really going on? Does the cancelation of the Chinese dominated Immigrant Investor Programme (IIP) mean the bubble is finally about to burst?
Vancouver’s HPI (Home Price Index)
There is often a disconnect between the average prices of housing, and the metric preferred by the Real Estate Board of Greater Vancouver, the previously mentioned HPI. Instead of the average-price calculation (total sales value divided by total sales), the HPI uses a sophisticated formula that takes 26 pages to explain and accounts for the month-to-month variance in the type or location of homes being sold.
Since early 2011, the prices for Vancouver homes have changed direction by a factor of 10 per cent, nearly 5 times. It’s unprecedented, and the ride seems to be getting wilder. Between June 2013 and February 2014, average prices soared 22 per cent, hitting a record $1.4 million. This was followed by the aforementioned drop of 11 percent.
It’s probable that current spate of market volatility is based on speculation, on the doubt surrounding the impact of scrapping IIP, which made Vancouver a hotspot for millionaire immigrants from all over the world.
Chinese dominated Immigrant Investor Programme (IIP)
Although the Federal Government has cancelled the program in March, the effects will only be felt in June. This is when more than 40,000 Vancouver-bound immigrants, representing some 12,000-15,ooo households, will learn Canada has officially yanked its welcome mat.
As of right now, it’s hard to tell how many of these people already purchased homes and will be looking to sell. While some impact is certain, Vancouver will still retain its moniker as one of the most beautiful and livable cities in the world, making the exact outcome anyone’s guess.