NEW HOUSING SUPPLY OUTSTRIPPING DEMAND
On November 3rd, 2006 The Vancouver Sun business section, there is a major report about the present Vancouver housing market.
With a local research firm finding supply outstripping demand in some areas, it shows that new housing construction shows more signs of cooling in British Columbia. In a report, the Vancouver-based development-research firm MPC Intelligence said markets are still strong. And the number of “speculative investors” buying housing units drop. Meanwhile, “allowing a bit for air out of the housing balloon so that prices and sales slow down a bit is probably a good thing for the market,” Podmore said. The combination of rising prices and moderately higher interest rate will be the main factors that reduce housing starts.
Connection to Chapter 2
Since 2000, Vancouver housing prices are continuously growling crazily, but the quantity demand is still increasing. So what are the factors to cause the quantity demand to grow while the prices are growing? 1. Income-- an increasing in incomes allow people to purchase houses at a high price; 2. Taste and preferences—people’s taste for lifestyles are develop. 3. Expectations of future prices—it’s show that a lot of the houses are bought by “speculative investors” because they have a highly expectation of future prices; 4. Number and characteristics of buyers—Canada accepts more immigration, so the land resource is become more scarcity; 5. Expectations of future incomes—people tend to buy more or ignore the price growth if they know they are going to get a higher salary. Suppliers are definitely very happy to see the active market. As a response, they will build more houses to meet the need of the markets. Even “a slowing of sales in the resale market will leave less spillover of demand into the new housing market, which will lead to a dip in new housing starts.” Also, houses are defined as elastic. If the housing price continually to rise, less people will buy it and fewer families are able to afford it. Meanwhile, there are lots of substitutes they can choose, such as rent a house or buy an apartment etc.
The up coming of 2008 Vancouver Winter Olympic games is going to let more people know about Vancouver, this wonderful city for living. There is no debut that housing price will keep going up. So do you think it’s a good thing or a bad thing?
posted by Apple Z @ 3:38 PM
2 Comments:
When they build more house in vancouver, they can increase the price of the house and sell it out in high price. Even though it is sell in a high price, people still demand more of it.
While Vancouver is consistently ranked in the top three most livable cities in the world, The city's popularity comes with a price." The city’s residents are generally affluent. Vancouver can be an expensive city, with the highest housing prices in Canada." Several 2006 studies rank Vancouver as having the least affordable housing in Canada, one ranking it fifteenth least affordable in the world, marginally more affordable than London. The city has adopted various strategies to reduce housing costs, including cooperative housing, legalized secondary suites, increased density and smart growth. Nevertheless, as with many other cities in North America, homelessness is a concern, as is the growing gap between rich and poor.
source: www.wikipedia.org
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