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Vancouver to keep attracting foreign home buyers: RBC

Last Updated Oct 12, 2016 at 12:21 pm PDT

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Summary

The bank says it's unlikely there will be a wholesale collapse within the market

One senior economist says once the shock of the 15 per cent tax wears off, overseas money will flow back into the city

VANCOUVER (NEWS 1130) – The Vancouver-area housing market is “cooling but not collapsing,” according to the Royal Bank. It says the market began slowing last spring and expects “further weakening in demand and moderation in prices in the near term,” although a “wholesale collapse” of 25 to 30 per cent is unlikely.

RBC Senior Economist Robert Hogue says Vancouver’s economics and demographics “remain solid,” but cautions the area’s economy “depends heavily on housing both directly and indirectly.”

The bank also says speculators “buyers motivated purely by expectations of capital gains” have had a “significant role in boosting demand” during the surge in 2015 and early this year.

On another front, Hogue thinks Vancouver will continue to attract wealthy foreign buyers “once the initial shock from the [new 15 per cent] tax has run its course.” RBC also believes that a sustained surge in listings would be an early warning sign, indicating speculators and other owners were cashing in.