Vancouver prices to continue rising up to 2041, reveals economist

In the midst of ever-dwindling supply and increased inbound population, positive homebuyers shouldn’t hold their breath for home prices in Vancouver to take a breather anytime soon, a prominent BC economist revealed.

Helmut Pastrick, Chief Economist at Central 1 Credit Union, said that the influx of an expected 1mn immigrants from now up to 2041 will make the prevailing affordability crisis worse, particularly for new families and young professionals.

The Vancouver Sun quoted Pastrick stating in a September 27 convention that the ongoing growth coupled with a shortage of land for expansion in the geo-constrained metro will inspire an increased demand for housing. “I think it will be a national and global development as well,” he added.

Home prices in Metro Vancouver have mushroomed of late and, since income is not likely to keep pace with surging rates, young families will find it more and more difficult to afford renting for longer.

He maintained that there’s no novelty in such cycles, stating that the housing market of B.C. has, time and again, witnessed constant rises and dips, with a chain of significant recessions since 1957 wherein the prices nosedived between 10 percent and 35 percent.

Elevated home prices are crushing the dreams of young demographic in the province, said Pastrick. Humiliated by soaring house prices, the average millennial in Vancouver will at least need 15 years to save enough for the down-payment of a condo.

Though the ongoing development will, for sure, make the hottest market of Canada even more distended, Vancouver won’t stand alone in quest of desirable properties.

With an increase in home prices, business competition and developments, the desire for fanciest property will, too, surge.

I think it will be a national and global development as well,” Pastrick said.

In order to neutralize the issue and potential crisis before they reach the brink of no return, Pastrick asserted that provincial authorities must prioritize the construction of more rental accommodations, along with working towards considerable reduction of income taxes. “We will see more renters than we do today, largely because of the unaffordability,” he argued.

To address the issue, he further said that the provincial authorities should mull over reducing the cost of parental leave and transit, and child care, so that young families can save themselves from having to go for another mortgage for child care.

The west coast city has emerged as a prime contender for a housing bubble, thanks to the consistent surge in house prices.  Swiss bank UBS, in its latest appraisal of 18 global metropolitan markets, found that Vancouver surpassed other hot and bloated global markets like Stockholm, London, Munich and Sydney on account of real-estate meltdown risk.

The risk of substantial price correction appears very elevated,” the UBS report claimed. “Real house prices have increased by more than 25 per cent since 2014 in the wake of a weak Canadian dollar which apparently stimulated Asian demand even further.

Meanwhile, the Associate Professor at UBC’s School of Population and Public Health, Paul Kershaw said that interest rates should surely be increased since they are helping the government fuel the listless economy. However, he held the opinion that the availability of cheap cash is the prime reason behind the ongoing surge in housing prices across Metro Vancouver.