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Roundup: Vancouver real estate prices rise despite poor sales volume

October 20, 2010

Filed under: Real Estate Market,Vancouver — Richard Morrison @ 2:23 pm
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vancouver, Oct. 19, 2010 (Xinhua News Agency) — The median price of detached houses in vancouver rose to 873,500 Canadian dollars in the third quarter, up 8.8 percent year on year, Canada’s Royal LePage House Survey said Tuesday.

Despite a 10 percent drop in sales over the same period in 2009, prices for standard two-story homes in vancouver were up 8 percent on average to 977,250 Canadian dollars, while those for condominiums increased 10.2 percent to 491,000 Canadian dollars.

James Wong, a local realtor, told Xinhua that sales had been noticeably down in vancouver for the last three to four months, dropping about 25 to 30 percent by his estimate, but prices had not come down and in some cases even risen slightly.

He said while prices of detached houses were “surprisingly” holding still, condominiums were faced with pricing pressure. With several new condo developments in the suburb city of richmond in southern vancouver, supply may have exceeded market demand.

“For town homes and detached homes, the interest (from buyers) is still holding. But with condos in richmond, for those below five-years-old, there is a seven-month supply. A six-month supply is balanced. Pricing pressure will start to build when there is more than a six-month supply,” said Wong.

Another factor perhaps responsible for the slow sales was the introduction of the Harmonized Sales Tax in British Columbia in July.

The tax combined the 7-percent provincial sales tax and the 5-percent federal goods and services tax into a single 12-percent tax.

The tax lifted prices of new homes over 400,000 Canadian dollars by 7 percent and thus brought up the costs of older homes, which were previously exempt too, said Wong.

Statistics show East vancouver experienced the biggest gains as condos rose 20.2 percent in the third quarter to 429,000 Canadian dollars, while standard two-story homes rose 15.9 percent to 729,000 Canadian dollars. Detached bungalows were up 10 percent to 649,000 Canadian dollars.

homes on vancouver’s west side, the most expensive area in the country, were up 8 percent to an average of 1,350,000 Canadian dollars.

West vancouver, not to be confused with vancouver’s west side, saw condos increase 9.5 percent year-on-year to 460,000 Canadian dollars, while detached bungalows rose 9.1 percent to 960,000 Canadian dollars.

Wong said with banks currently offering a fixed five-year mortgage at about 3.6 percent, the combination of cheap money and a healthy demand from immigration — Canada accepts about 260,000 newcomers each year — would only make the market “a little softer” next year, but “not that drastic.”

“One of the major factors is that all governments are printing money. When there is a lot of money circulating around, you only push up asset prices. So real estate is one of the very important components of assets where people invest their money. All the loose money may eventually end up in the real estate market. But the U.S. is a different story. They have a big mess to clean up there,” said Wong.

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