Vancouver's luxury market: 'There's something wrong with this picture'

by Neil Sharma on 09 May 2019

Trying to put a positive spin on Vancouver’s luxury property prices—where a two-bedroom, 1,831 square foot condo costs $2,660,000—is a tall order.

Sure, in Monaco, a three-bedroom apartment in the District de Fontvieille will go for $14,897,938, and in Hong Kong a three-bedroom apartment on Kennedy Rd. goes for $13,635,200—making that downtown condo in Vancouver look like a bargain.

However, the population of Vancouver proper in 2017 was 675,218, and presuming it has hitherto increased, it will likely only be a marginal boost. Monaco’s population is considerably less, but it’s a known playground for the wealthy. In 2017, Hong Kong estimated its population was 7.392 million, so how does a two-bedroom unit go for over $2 million in Vancouver?

“[Comparing Vancouver to global markets] is totally incongruent,” said Robert Mogensen, a broker with The Mortgage Advantage. “Vancouver is a branch office city, not a head office city, for one thing. It’s not a central banking city like those other world cities, so to compare it is ridiculous. Is it a pleasant place to live? Yes. Is it great for proximity to the mountains for skiing, or for going golfing? Yes. But it’s still a branch office city.”

Point2 Homes recently made the comparison, and while it does have merit—Vancouver is a global real estate staple and prices are a relative bargain compared to those found in London, New York and Paris—it begs the question: Why are prices so expensive in a city with fewer than one million residents?

“Vancouver is very attractive because you can dump your money here and you pay a modest amount of property tax, and because you don’t work here you don’t pay our high income taxes. It’s perfect for someone looking to shelter their money in a safe place,” said Mogensen.

“There’s no reason for a city like Vancouver with a general population and income base here—I mean real Canadian income base—to have prices where they are. The average Canadian worker can’t afford to buy accommodations in Vancouver, and even well-heeled couples with two professional jobs are being forced to look at condos or, at best, townhomes because single-family homes are so far out of reach. There’s something wrong with this picture.”

To elucidate his point, Mogensen noted that a client of his is a doctor and, along with his wife, should be living in a Shaughnessy single-family home in West Vancouver, but instead lives in an eastside townhouse.

“If you have surgeons who can’t afford to live in the most desirable parts of a city, there’s something wrong with that.”

 

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