Vancouver price growth breaks all records as supply dries up

Experts warn against hasty federal intervention to cool down Canada’s most overheated residential real estate markets

Vancouver price growth breaks all records as supply dries up
Vancouver continues to maintain its reputation as Canada’s most in-demand housing market, but even for the overheated city’s standards, its numbers from May 2016 have achieved record-breaking heights.
In her latest subscriber-exclusive note released on Friday (June 3), Dr. Sherry Cooper of the Dominion Lending Centres (DLC) pointed at recent MLS figures showing that May 2016 sales total in Vancouver sat 35.3 per cent above the 10-year average for that month. This unprecedented number marked the highest ever sales volume for May in Vancouver.
At the same time, supply noticeably shrank by 37.3 per cent on a year-over-year basis. DLC cited this dearth of listings as a contributing factor to the city’s grotesquely inflamed price growth.
“Home prices in Greater Vancouver are up a stunning 48.3 per cent in the past three years and the one-year change has been close to 30 per cent. The numbers are similar for the Lower Mainland as a whole. The price gains are even larger for single-family detached homes as supply is very limited,” Cooper wrote.
While acknowledging that the intensified calls for federal intervention to cool down the market point at a growing discontent towards perceived culprits like over-borrowing and foreign buyers, the DLC chief economist advised the government to tread carefully in its future plans for the Vancouver and Toronto markets.
“This is a very tricky issue. The strength in housing (in these two regions) has been a key underpinning to economic growth this cycle. As well, 70 per cent of Canadian households own their own homes and home equity is for most people the largest component of household wealth, so the government is leery about triggering a collapse in housing. Nonetheless, housing growth this strong does not usually end well,” Cooper warned.