Realestock Blog

The Royal Bank of Canada has raised serious concerns that for most people housing is simply too expensive in Vancouver.  

On Monday, RBC released its quarterly report on housing and affordability. According to the report, on average, the typical Canadian homeowner spends 48.9 percent of their household income on servicing the mortgage on a median two-storey home – an increase of 2.1 percent overall due to rising mortgage rates.  

However, in Vancouver it’s a very different story – the proportion of income required to service the mortgage on a median two-story home or a detached bungalow (a smaller starter home anywhere else in the country) has risen to an astonishing 70 percent.  The situation is not much better for owners of apartments or condominiums – servicing the mortgage on a condo consumes 43 percent of household income.

The report singled out Vancouver’s white hot housing market, but it wasn’t to pass around congratulations: "RBC housing affordability measures are very close to their all-time high, which points to significant underlying stress and raises a red flag," said RBC Economist Robert Hogue. “Generally we have dismissed the case of housing market bubbles in Canada, but the situation in Vancouver is probably the closest to one in the country.”

This means the market could take a big hit unless the pressures ease - "very poor affordability is likely to restrain demand in the period ahead," said Hogue. According to the report, BC and Ontario saw the worst deterioration in housing affordability as prices neared the record highs seen in 2008.

Photo: Even condos in Vancouver may be out of reach for most homeowners. Credit: Beaster725, Flickr

Sources: Bank Raises Red Flag Over Housing Affordability, The Vancouver Sun; House Costs Near Record High in BC, The Province; Housing Becomes Less Affordable, The Globe and Mail.

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The Chinese real estate sector could be in for a big shakeup soon. Many pundits are predicting that the government is getting ready to introduce a property tax. 

While most people in the world regard property taxes as a way of life, in officially Communist China there’s no government taxes on the books for private property ownership because originally there was no private property ownership at all. However, things have changed dramatically in recent years - market demand and rampant speculation have fueled a huge real estate industry, and have helped push the Chinese economy into overdrive – annual growth is over 8% a year (as opposed to the 2 or 3 percent that more established economies grow at during boom year).  

So why introduce a property tax then when it could weaken one of China’s strongest economic sectors? According the Financial Time’s Geoff Dyer, there are a lot of good reasons to get the Chinese middle class acquainted with tax:

A property tax is the favored policy tool of many a reform-minded economist. It would help reduce the rampant speculation in the real estate sector by introducing a cost for holding empty property. And it would help develop a reliable source of income for cash-strapped local governments - one of the key long-term policy challenges for Beijing.

While any property tax rolled out would likely be very minimal at first, “a small annual levy on second or third homes in the luxury sector”, there are still fears that is could prompt a massive sell off and scare away speculators – one of the key factors in the ever increasing property prices.  

In April, Beijing rolled out a series of much needed measures to cool overheated home prices, and since then, speculation that a real tax is coming has intensified. "There are several plans on the table. While we don't know which one will be chosen, it is more likely to be implemented by New Year's Day," a market source said in an interview with the Hong Kong Standard. "Such a move does not require National People's Congress approval, only the State Council's, so the time frame is shorter."

Meanwhile, commercial real estate in China remains strong, even with high vacancy rates.  The Wall street journal has reported that China’s insurance regulator has just amended the rules that govern how insurance corporations invest their assets. Chinese insurance companies are now allowed to invest up to 10% of their assets into commercial real estate – a move which could introduce as much as 460 billion yuan ($68.5 billion USD) of potential demand into the commercial real estate market.

Sources: 

Does Beijing's Clampdown on Property Still have Force? - Geoff Dyer, The Financial Times

Property Tax Revisions Loom as Prices Continue to Spiral - Beth Ye, The Hong Kong Standard

Insurers are Likely to Boost China Property Demand - Aaron Back, The Wall Street Journal 

Picture:

Lensfodder, Flickr

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Maybe you live in a dreary rental that you can’t do much with. Maybe you’re dying to change something about home, but you don’t have much of a budget. Maybe you’ve got the time to embark on a weekend home improvement project, but you’re lacking inspiration. Or maybe you just like to dream?

No matter what the reason, going online can be a huge source of ideas, inspiration, daydreams and super practical advice for anyone with the decorating bug. I certainly have one... so here are a few my favourite places to find inspiration when I’m online! 

Apartment Therapy: One of the most popular online design sites, and a personal favourite of mine. Apartment Therapy works hard to be a fantastic resource - it’s constantly updating during the day with a great mix of DIY projects, design showcases from around the world, interviews with artisans and designers and even photographic tours of Apartment Therapy reader’s homes from around the world. If you like homes and design, it should be in your bookmarks folder.

Freshome: Skewing much higher in the budget range than Apartment Therapy. With plenty of pictures and information about some of the most stunning and inventive architecture in residential homes today, reading Freshome is a fantastic way to fuel your daydreams if you’re a fan of architecture. If that’s not entirely your speed, don’t be deterred - there are still plenty of great articles and inspiring ideas on the site.

Design*Sponge: This site is almost the polar opposite of Freshome. Where is the former is about offering up high end inspiration, Design*Sponge is all hands on, affordable and ever so slightly twee. There is a great focus on putting up fun, practical DIY projects - so if you read Design*Sponge, you’ll never be bored and wishing you had something to do on a dark, wet winter afternoon! Also not to miss: the period under $100 product round ups.

Ikea Hacker: Sometimes it’s good, sometimes it’s amazing, occasionally you’ll want to do it yourself, but a lot of the time, you wonder why anyone would ever do that to perfectly good furniture... It’s Ikea Hacker - the blog where readers from all over the world showcase their (occasionally misguided) efforts to improve on the products from the world’s most popular design store. Whatever the outcome, the owners of the furniture in question are happy, and usually it’s structurally sound...

And there you have it - a round up of some of my favourite websites for design inspiration. Got suggestions of your own? Share them in the comments!

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