Are non-residents decoupling home prices from local incomes?
A study has found a link between Vancouver municipalities favoured as residential areas by non-residents and high housing unaffordability levels, InkStone News reported.
The price-to-income ratios in various municipalities of the Canadian metropolis appear to be correlates of the proportion of detached residential properties that have a non-resident as an owner, according to a white paper by Josh Gordon, assistant professor at Simon Fraser University’s school of public policy.
The paper, which had not been peer-reviewed before publication last week, found a 96 percent correlation between the municipalities’ price-to-income ratios and the proportion of detached homes owned by non-residents.
“This is compelling evidence that when it comes to the extreme ‘decoupling’ [of prices from local incomes] seen in the Vancouver housing market, foreign ownership is the primary culprit,” InkStone quoted Gordon as saying.
Such a high correlation is “rarely seen in social science research,” said Andy Yan, director of the City Program at Simon Fraser University. “It indicates a very strong relationship. So it is the presence of non-resident buyers that is forcing up prices.”
Vancouver ranks second only to Hong Kong as the world’s most unaffordable city for housing, with a price-to-income ratio of 12.6, according to Demographia. The Canadian city has been a popular destination for migrants from China, Hong Kong and Taiwan for several decades.
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