Vancouver’s housing market may depend on the strength of China’s economy as much as anything that happens in Canada.
The CHART OF THE DAY shows the relationship between growth in China’s gross domestic product and home prices in metropolitan Vancouver, Canada’s most expensive city, where Statistics Canada data show 15 percent of the population has a first language that’s a Chinese dialect.
Bank of Canada Governor Mark Carney has warned that indebted domestic consumers are a risk to the world’s 11th largest economy, and Finance Minister Jim Flaherty tightened mortgage lending rules for a fourth time last year. Vancouver house prices have risen as much as 73 percent since mid-2005, pushing the average cost of a single detached home in the city over C$1 million ($1.01 million).
The most recent Chinese data signal Vancouver may get fresh support from across the Pacific Ocean. Annual growth in Asia’s largest economy was 7.9 percent in the fourth quarter, up from 7.4 percent in the prior quarter, marking the first acceleration in two years, the National Bureau of Statistics said Jan. 18 in Beijing.
Faster growth “would support a slightly stronger Vancouver housing market,” said Robin Wiebe, senior economist at the Conference Board of Canada in Ottawa and formerly an analyst at Canada’s federal housing agency. “The major wild card right now is the ongoing impact of the tighter mortgage rules.”
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