Vancouver is considered one of the most expensive areas in North America and this is evident in their high real estate prices. The value of properties and their annual rate increase are higher than those in Toronto, and significantly higher than those in Montreal. Montreal condos are more affordable than those in other metropolitan areas in Canada. And in some areas in Montreal, the rates have even decreased.
WHY IS THERE A CONCENTRATION OF EXPENSIVE HOUSING IN VANCOUVER?
Due to the economic boom of China in the last several years, investors have moved investments to countries like the United States, Australia, and Canada. They send their children to Ivy League Universities. And in search of a better quality of living, they found Vancouver to be favorable because of its cultural connections, good schools, rich and beautiful natural resources, and infrastructures, among others.
They continually brought properties at a high cost, which drove the prices way above the national average. Because of its popularity and lower interest rates, it now attracts other wealthy buyers from the United States, Europe, Middle East, and Asia. However, this has caused problems and now the Canadian government is implenting laws to regulate the rising prices.
One of the problems that resulted from this was the protest from young professionals who started a movement called #donthave1million. The complaint stemmed from being unable to find decent housing which at times keeps them from settling down. Often, they have to live with roommates because they can only afford renting a shared apartment.
GOVERNMENT MEASURES TO COOL DOWN THE MARKET
To equalize the competition, the new rule requires buyers to pay a bigger down payment for properties that costs more than $500,000. The minimum down payment is 10% of the portion of the total amount. The goal is for people to choose houses or condo units that cost less than $500,000. If the ones in Vancouver and Toronto are too expensive, they could search for options in Montreal and other cities in the country.
Such measure was done to slow down or stop the double-digit price increase of housing in Vancouver and Toronto. In the past, as long as people had a good insurance from the CMHC or Canada Mortgage and Housing Corporation, they could pay as little as five percent for the down payment.
According to experts however, this effort may only work for the short term. Similar efforts from the past revealed that people rushed to buy expensive properties before the deadline so they would not have to be covered by the mandate. Among these strategies were the previous minimum down payment increase to five percent, and the reduction of amortization period from 40 years to 25 years. Furthermore, the market affected is pretty small, or up to four percent of the total population.
Still, this is good news for some developers of less-expensive housing. They can expect an increase in the number buyers of affordable condo units.
