Analysis: Vancouver sky-high home prices set to fizzle not pop

Thu Feb 9, 2012 1:05pm EST
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By Nicole Mordant

VANCOUVER (Reuters) - Emily Yao admits to disappointment when her bid on a three-bedroom condominium in this desirable West Coast city was turned down last October.

But a month later the systems programmer, who moved to Vancouver from mainland China six years ago, snapped up the still-unsold condominium on Vancouver's East Side for C$550,000 ($550,000), C$9,000 less than the original price tag.

It's a pattern being replicated across the Pacific port city, in a dramatic turnaround from the bidding wars, show day stampedes, and above-market offers that long dominated North America's costliest property market.

"Since October, it was like someone turned off the tap. It became absolutely dead," said long-time realtor Pam Allen.

What's taking the sizzle out of Vancouver prices and putting the brakes on sales are expectations that rock-bottom Canadian mortgage rates will stay low, so there is no rush to buy.

At the same time, Chinese investors, who have long helped to underpin the city's red-hot market, are holding back because property market curbs back home means they have less cash available.

But with immigrants still streaming in from China and elsewhere, and the city frequently rated one of the most livable on the planet, most experts see prices fizzling rather than imploding with a bang.