The most densely populated city in Canada, Vancouver tends to build upwards with multi-storey residential apartment blocks. Its proximity to mountains, ocean, lakes and rivers make it the ideal location for outdoor pursuits, but it is also renowned for a wide range of cultural activities and events, such as the Vancouver Film Festival.
Demand for residential properties in Vancouver is high and the market remains strong, with nearly 22,000 housing completions in 2017, up 20% on the 10-year average. However, there remains a supply and demand imbalance as Vancouver’s population continues to grow at a rapid pace.
The popularity of Vancouver as a place to live and work has made the city one of North America’s most expensive, with an average house price of over $815,000 ($USD). Affordability constraints are severe and have led the provincial government to implement a number of cooling measures. These include an increase in the foreign-buyers’ tax to 20%, an empty homes tax equal to 1% of a vacant property’s assessed taxable value and an increase in property tax rates for homes assessed above $3 million ($CAD).
These measures, along with an increasing interest rate environment, are having a noticeable impact on the market. Annual house price growth was 4.1% year on year in August 2018, down from an average of 9.3% per annum over the last decade.
The lack of affordability in the homebuyer market is also putting pressure on the rental market where demand is strong and vacancy rates are low (1% in October 2018). Reflecting this, rental growth was 6.8% in 2018, up from an average of 4.8% between 2008 and 2017.
Tight market conditions are attracting development in the rental sector. According to CMHC there were nearly 6,000 purposebuilt rental units under construction at the end of Q3 2018, a historical high. Despite this, a supply and demand imbalance in the rental market is likely to persist for some time.