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Vancouver’s Luxury Housing Market Exempt From Recovery

Steve Saretsky -

While Vancouver has enjoyed a sizeable increase in sales activity recently, it doesn’t appear to be a fuelled by an increase in Chinese capital outflows as it had previously in 2015/16. Recent analysis from BCA Research, the worlds leading provider of global macro research since 1949, shows Chinese capital outflows remain muted.

Chinese capital outflows
Chinese capital flight remains muted. Via BCA Research

As we can see in the chart above, China’s foreign reserves remain stable and capital outflows have pulled back sharply from a few years ago.

Thus, it shouldn’t be surprising to see the high end luxury market continues to struggle in Greater Vancouver. In fact, the high end market has been completely exempt from the supposed ongoing recovery in the Vancouver housing market.

As of September, there is 29 months of inventory for sale across Greater Vancouver for homes priced $3M and up. For context, anything above six months is considered a buyers market.

Months of inventory for luxury homes
Greater Vancouver months of inventory for all homes priced $3M and higher.

The current 29 months of inventory for sale continues to put downwards pressure on the luxury market, and remains miles away from the cycle lows of 3.6 months of inventory set back in March 2016.

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022