Vancouver’s surge in house prices of 36 per cent over the past year was by far the highest in the world, but the new 15 per cent tax on foreign buyers is expected to slow the growth, according to a group that tracks housing prices in 37 cities.
Vancouver topped the ranking for the fifth consecutive quarter of the Prime Global Cities Index released by Knight Frank on Friday.
The 36.4 per cent hike was far and away the biggest hike among all cities, far outpacing the average gain of 4.4 per cent from June 2015 to June 2016.
The city with the second-highest price growth was Singapore, at 22.5 per cent. The only other Canadian city listed was Toronto, with a 12.6 per cent increase over the same time period, the fourth highest overall.
The authors predicted price inflation in Vancouver “is expected to slow in light of a new tax for foreign buyers.”
B.C.’s new 15 per cent property transfer tax assessed for non-Canadian buyers came into effect on Aug. 2.
“Vancouver joins an expanding club of cities (which includes Hong Kong, Singapore, Sydney and Melbourne) where policy-makers are taking steps to control the flow of foreign capital into their housing markets in order to stem demand and improve affordability for local residents,” Kate Everett-Allen, head of international residential research at Knight Frank, said in an emailed statement.
“Other top performers this quarter include Shanghai, Cape Town, Toronto, Melbourne and Sydney; all saw annual price growth reach double figures in the year to June.”
Housing markets in most of the top 10 ranking cities have cooled over the past year, thanks to interest rate hikes, fees for foreign buyers, higher land taxes or new limits on second home purchases, added Everett-Allen.
Hong Kong’s luxury residential market performed the worst, with prime prices falling 8.4 per cent over the past 12 months. Prices in Taipei dropped 7.7 per cent, Moscow 5.2 per cent, Delhi 4.9 per cent and Paris 2.7 per cent.
