Real Estate Investments in Greater Vancouver Offer Most Attractive Investment Yield


Is there an investment asset that can produce a 366 per cent return in a three-decade span? Yes, it is the housing property in Canada. Is there an investment asset that can beat this performance? Yes, it is the property in Greater Vancouver in British Columbia, Canada. Indeed, Greater Vancouver has proven to be one of the real estate investment hotspots, given its appeal as an investment market that boasts the natural beauty, strong economic and demographic fundamentals, and financial stability, which together ensure optimal yield for a low level of investment risk.

Property prices in Greater Vancouver, BC have risen by some 473.7 per cent in the period between 1980 and 2009, yielding, on average, spectacular 17 per cent per annum over the noted period. In other words, according to Canadian Real Estate Association (CREA) and RE/MAX Canada, the average price of a residential property in Greater Vancouver in 1980 was slightly over $100,000. Today, that same property is worth, on average, somewhat more than $574,000.

The noted return on investment looks especially attractive given the low risk associated with investments in residential property. Investments in residential real estate in Greater Vancouver have been characterized by an exceptional stability. Average price of a house in Greater Vancouver dipped seven times in the past 30 years. Most of the dips occurred in the late 1990s. However, all declines in average prices of homes in Greater Vancouver have been exceptionally mild, with the largest of the annual declines not exceeding 3.5 per cent.

This performance of real estate investments in Greater Vancouver looks remarkable when compared to performance of property investments in the Canadian housing market as a whole or performance of investments in most other regional real estate markets in Canada. As noted earlier, the average price of a property in Canada has risen by 366 per cent between 1980 and 2009. This translates into an average annual return of 13 per cent in the same period. Only Victoria, Regina, Toronto, and Ottawa have recorded returns higher than this average for Canada as a whole. In fact, Victoria, which is also located in British Columbia, has the second-highest return on residential real estate investments in the Canadian property market. An investment in housing property in Victoria has returned 448.5 per cent in total return, or 16 per cent on average each year between 1980 and 2009. This makes British Columbia the best performing regional property market in Canada.

On the other hand, taking an international investment perspective, even less robust would have been investment returns on U.S. real estate. Based on the average values of homes in the United States in the period between 1980 and 2009 (using the Freddie Mac Conventional Home Price Index), an investment of $100,000 in residential properties in the United States in 1980 would be worth $382,576 today. This would represent a total return, measured by the increase in home prices, of 283 per cent over the noted period. In other words, an investment in the real estate market in the United States would have produced an average nominal yield of 10 per cent per annum, which is much lower than that earned on the property investment in Greater Vancouver.

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Updated: February 22, 2019 — 7:10 am