VANCOUVER (Reuters) - More than 90 percent of all detached homes in Vancouver are now worth more than C$1 million ($772,141), up from just 19 percent a decade ago, a new study has found, showing how rapidly housing prices have escalated in the Canadian city.
The biggest jump came in the last two years, with the proportion of million-dollar homes in the city climbing to 91 percent in 2016 from 59 percent in 2014, according to the study by Andy Yan, acting director of Simon Fraser University’s City Program.
“This shows how what used to be the earnest product of a lifetime of local work is perhaps quickly becoming a leveraged and luxurious global commodity,” said Yan.
The median household income in Vancouver, meanwhile, rose just 8.6 percent between 2009 to 2013, according to the most recent data from Statistics Canada. Adjusted for inflation, it would be about C$77,000 a year in 2016.
That puts typical incomes well below the threshold needed to purchase million-dollar homes, said Yan, noting other factors must be driving the sharp increase in home values in Vancouver.
“It’s global cash, meeting cheap money, meeting limited supply,” he said, adding that all three factors are working to “magnify each other” and drive further speculation.
Foreign investment has long been blamed for soaring housing prices in Vancouver, with the most recent wave of offshore cash coming mostly from mainland China. A widespread corruption crackdown there has led to massive currency outflows, which have coincided with a sharp jump in housing prices in Vancouver’s prime neighborhoods.
Canadian Prime Minister Justin Trudeau, on a two-day visit to Vancouver, told CBC Radio that foreign money is “obviously” playing a role and that measures are needed to stabilize the real estate market, though he did not specify what those were.
A Bank of Canada official, meanwhile, ruled out raising interest rates to cool red-hot housing in Toronto and Vancouver.
“Clearly those localized issues. To solve those, it’s really outside the purview of monetary policy,” Senior Deputy Governor Carolyn Wilkins told CBC Television late on Friday.
Yan’s study looked at provincial assessment data, which lags sales data by several months, and was focused exclusively on the roughly 67,000 detached homes in the City of Vancouver.
Region-wide, the price of a detached home soared 130 percent over the last 10 years to hit C$1.5 million in May, according to the local real estate board.
Reporting by Julie Gordon; Editing by David Gregorio and Bernard Orr