According to the latest UBS Global Real Estate Bubble Index, Vancouver is the fourth most inflated housing bubble in the world only one spot behind Canada’s other hot property spot, Toronto, and both Canadian cities are behind Hong Kong and Munich.
Housing affordability is a major problem throughout cities around the world.
Although the report may suggest that the GTA is outpacing Vancouver in terms of housing inflation, the GTA actually went down from the world’s most inflated market in 2017 to third place in 2018. While Vancouver stayed in fourth place, it’s inflation index actually went up by 0.12 %. But with rising interest rates, stricter mortgage regulations, we have already seen a significant slowdown in sales and appreciation in both markets.
The report shows that housing affordability is a major problem throughout cities around the world. Purchasing a 60-square metre apartment is beyond the budget of most working people, even those who have a respectable job in highly skilled service sectors. Rents have also continued to climb, gobbling up an ever-increasing share of tenants’ income.
As a result, governments around the world have taken measures to increase affordability and slow down home price increases. Some of them have included rent control and foreign investor taxes, though the report warns that over-regulation at the peak of a housing boom could accelerate or even trigger a market correction.
Affordability issues also stagnate a city’s long-term growth and eventually cause real estate investments to produce diminishing returns.