CBRE, the world’s largest commercial real estate and investment firm in the world, recently released its annual Global Living Report. This report examines the housing markets of 35 major cities from around the globe, in order to give a macroeconomic look at the global state of the real estate market.
Although most of Canada has seen a slowdown in real estate activity, that’s not necessarily the case worldwide. CBRE’s report shows that global housing prices are still on the rise, with 30 out of its 35 cities experiencing increasing housing prices throughout 2018. In fact, 4 of those cities, Barcelona, Dublin, Shanghai and Madrid, saw growth in the double-digits.
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Readers that have kept up to date with the last few Global Living Reports would not be surprised to see that Hong Kong, Singapore and Shanghai continue to lead the list as the most expensive cities in the world, with average property prices at USD $1,235,000, USD $874,372, and USD $872,555 respectively.
Even after the slowdown in sales, and stagnant housing prices witnessed throughout 2018, Vancouver takes the number 4 spot in the list for the second year in a row, with an average property price at $815,322 (USD). As it stands right now, Vancouver now has the dubious honour of being the most expensive city in North America.
Regarding the reason why Vancouver takes the 4 spot again, the report says that “Demand for residential properties in Vancouver is high and the market remains strong, with nearly 22,000 housing completions in 2017, up 20% on the 10-year average. However, there remains a supply and demand imbalance as Vancouver’s population continues to grow at a rapid pace.”
The report acknowledges that measures taken by the provincial government to cool off the real estate market, including the foreign investor tax, as well as the increase in interest rates are taking effect, have caused Vancouver’s market to slow down. The report shows that the annual house price growth was 4.1% on a year-over-year basis in August 2018, as opposed to the average 9.3% annual average over the last decade. However, the report does not make any mention about the effects of the mortgage stress, and how it worsened Vancouver’s affordability woes even more.
At the same time, thanks to those home affordability woes, Vancouver now ranks as the sixth city in the world with the most rental growth during 2018. Of course, this comes to no surprise to Vancouverites. The city’s affordability problem continues to force its residents to turn to rent to meet their housing needs. Rental growth was 6.8% in 2018, an increase in 2% from the 2008 to 2017 average of 4.8% rental growth.
The only other Canadian cities that made the list are Toronto in number 12, with an average home price of USD $575,557, and Montreal at number 26, with average home prices at around USD $260,084.