The first few months of 2011 produced incredible growth in the Vancouver real estate market. Double digit growth in most of Vancouver's Westside, West Vancouver and Richmond skewed regional prices to a peak in June.
The surge in pricing is now cooling according to the Royal Bank of Canada.
Some home owners may be concerned that if interest rates climb, home values will drop. This would happen in a normal market, but we all know that Vancouver's real estate market doesn't play by the rules. Many Chinese buyers do not rely on bank financing - they are comfortable paying cash for their homes and would not be forced to sell if interest rates were to rise.
China's housing market has been rising for 19 straight months with crazy yearly gains in Beijing and Shanghai of 30%. According to the Wall Street Journal this is now starting to change and property prices in 70 Chinese cities fell for the third straight month. Chinese official have been working to make this happen by restricting multiple home purchases in China. This, in turn, is pushing Chinese investors to look to Vancouver to invest.
Some believe that the time has come for our government to impose foreign ownership rules to cool the Lower Mainland's hot housing market, but this is a topic for another article.