The country’s biggest asymmetrical price rise is being experienced in Vancouver according to the CIBC World Markets report that was issued on the 16th of September. This price gap is not just between condos and houses but it has also impacted the detached home segment. As the price gap keeps rising, it will definitely have a major impact on the real estate business in Vancouver.
The report also said that this price gap “reflects the impact of foreign investment activity in that space”. The gap is typically seen to be rising at the fastest rate and has impacted the highest end of the market. One aspect of the ever increasing prices of Toronto and Vancouver housing markets that poses a challenge is that the asymmetric price rise is seen in the expensive properties and this keeps rising continuously as opposed to the less expensive properties.
Over the past decade, this price rise has been the most prominent one. The asymmetric price appreciation has brought about a dramatic change in the prices of luxury homes which saw a whooping climb in rates nearly four times the rate of low price homes.
The major implication of such an exponential price rise is seen on those home owners who are looking to move up. These home owners find that they can no longer catch up with the price demands. They are priced out of this segment and the housing market altogether if the prices do not either stabilize or halt.
This makes market analysis very difficult. Referring to average prices when assessing the real estate market is kind of dangerous as you cannot tell or even estimate what the prices will be. The report quoted also said that the increase in the average house price masks a widening gap between the rising prices of both detached properties and the relatively muted increases in the price of condo units.
The overall Canadian household debt keeps rising. The pace of this rise is fast. This increasing debt is mainly attributed to the increase in mortgage borrowing. Statistics show that this mortgage borrowing accounted for 80 percent of the total Canadian household debt.
The detailed report also provided some useful insights. It was noticed that there was no notable rise in the pace of credit growth as seen in the past few months. This observation suggests that the spike in borrowing was not a result of the recent interest rate cuts by the Bank of Canada.
The good part is that even though household debts increase, the delinquency rates are decreasing. The delinquency rates are lowest over the past few months since 2009. This only suggests that even though the prices in the real estate market are increasing exponentially in certain segments, and even though Canadians take on higher debts, the vast majority of them have been paying up on time!
As for investing or moving up, it is best to consult a Vancouver Real Estate agent before you make the move and decide.
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