For a snapshot of the Vancouver real estate market, look to the mainland
Vancouver's housing market may depend on the strength of the mainland economy as much as anything that happens in Canada.
The chart of the week 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 per cent 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 per cent since mid-2005, pushing the average cost of a single detached home in the city over C$1 million (HK$7.8 million).
The most recent mainland data signals that Vancouver may get fresh support from across the Pacific Ocean. Annual growth in Asia's largest economy was 7.9 per cent in the fourth quarter, up from 7.4 per cent in the prior quarter, marking the first acceleration in two years, the National Bureau of Statistics said on January 18 in Beijing.
Faster growth "would support a slightly stronger Vancouver housing market", says 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."