Vancouver's 'freak show' property market

Vancouver real estate agent Bryan Yan is riding the wave of a property market boom.

On Point Grey Road in the west of the city - known as Vancouver's "Billionaires' Row" - he shows me around a two-bedroom house on the market for just short of 11m Canadian dollars ($8.4m; £5.7m).

The interior is all wood panelling and polished concrete. A terrace opens out onto the bay where boats bob in the water and seaplanes take off and land. From the Jacuzzi there are views of the snow-capped mountains in the distance.

In the past five years Bryan estimates that prices on this street have risen by about 120%, driven by demand from the international jet-set looking to add Vancouver to their list of homes around the world.

"It's great for business," he tells me, but admits: "It's irrational. If you look at the prices and the graphs, it's off the charts."

Out of reach

Vancouver property is red hot, and not just at the luxury end of the market.

Average house prices in the city are rising at record rates of 20-30% a year, and a typical detached house now costs about C$1.3m.

That's way beyond the means of most Vancouverites in a city with one of the lowest median household incomes in the country.

Real estate agent Bryan says property price rises have been "off the scale"

The Royal Bank of Canada warned recently that Vancouver is becoming "dangerously unaffordable". A recent study ranked Vancouver as the least affordable city in North America.

"We're an international freak show," says David Eby, a member of British Columbia's legislative assembly for Vancouver-Point Grey and housing spokesman for the opposition New Democrat Party.

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Listen to Edwin Lane's report from Vancouver on Business Daily, BBC World Service

On the walls of his community office in west Vancouver are testimonials of residents who have been forced to move out of the city by the rising cost of housing.

He says the local economy simply isn't big enough to justify the sky-high property prices.

The red hot property market in Vancouver is attracting the billionaire class

The result is an exodus of young people from the city. The local economy is being damaged and quality of life is being harmed.

Manhattan, London, Vancouver

Mr Eby says it is clear that a huge influx of foreign money is to blame.

"Black Rock, the world's largest investment firm, tells investors from around the world: 'Don't invest in gold anymore, invest in condos in Manhattan, in London, and in Vancouver,' and to people who live here that seems so crazy - why would Vancouver be on that list?"

One of the reasons of course is that Vancouver's natural setting makes it an attractive place to live. But another is its strong ties across the ocean to the Asia-Pacific region.

Researchers say much of the money now flowing into the Vancouver market is coming from China.

Wealthy Chinese looking for a safe place to park their money have gained access to the market through an immigrant investor programme started by Canada in the 1980s.

But hard data on how much money is actually coming in and where it's coming from is scarce.

Local politician David Eby says foreign money is turning Vancouver's property market into a "freak show"

Cameron Muir, the chief economist at the British Columbia Real Estate Association, says the influence of foreign money is being vastly overstated.

"Yes absolutely, we've had a larger share than other areas of Canada of investor-class immigrants who have come to Vancouver with a lot of wealth and they have for the most part bought homes here.

"But to say that somehow foreign investment is making it unaffordable for first-time buyers to get into the housing market in Vancouver is a bit of a stretch."

Frustration

That is rejected by David Eby. "It's a lot like the tobacco executive saying there's no proof that smoking causes cancer," he says. "It's so obvious what's happening in our market here."

Urban planner Andy Yan says it's a question of who the city is supposed to serve

Andy Yan is acting director of Simon Fraser University's city programme and an urban planner at Bing Thom Architects. He is among those frustrated by the lack of information on who owns what in Vancouver.

I meet him in the shadow of huge condominium towers that dominate the skyline of downtown Vancouver. He conducted his own research using census data and electricity usage and found that nearly a quarter of these condominiums were empty - suggesting they are being used as parking spaces for cash rather than places to live.

"The issue is who is [the city] supposed to serve?" he says. "The notion that this is a city where you can have a life cycle of being single in your twenties, having a professional life and then going and raising a family is being increasingly challenged."

How many of these condos are actually occupied?

Campaigners are calling for curbs on foreign investment in the shape of higher taxes on property ownership, fearing that Vancouver will soon become little more than a parking space for wealth.

Last year Vancouverite Eveline Xia started a Twitter campaign under the hash tag #donthaveamillion, highlighting the affordability crisis.

"Personally more than half my friends from university have left and that's been quite tragic for me," she tells me. "I'm probably going to leave too, I'm planning an exit strategy."

For David Eby, its the loss of Vancouver's youth that is most worrying.

"We desperately need people to come and live here who have skills of certain types," he says. "We need to fulfil our international refugee obligations.

"What we don't need is a lot of millionaires to move here to support the local Ferrari dealership - which we now have."