Vancouver No Longer Canada’s Most Expensive City (2024)

Vancouver’s reign as Canada’s most expensive city is over, a new survey has found.

According to Mercer’s 2022 Cost of Living report, Toronto is more expensive than Vancouver. Montreal, Ottawa, and Calgary rounded out the top five.

The global index ranked Toronto and Vancouver 89th and 108th, respectively. Hong Kong, Zurich and Geneva were listed as the world’s three most expensive cities.

Despite the Canadian landscape being relatively more affordable compared to other advanced economies, “it is seeing significant price increases in goods and services,” noted Nicole Stewart of Mercer Canada in a news release.

“In a highly inflationary environment where organizations and individuals have increased flexibility around their work locations, employers will need to ensure they have effective and responsive compensation and talent strategies to address the cost-of-living concerns of mobile employees,” Stewart added.

But what about one of the world’s largest real estate markets? This, too, has come down in recent months, joining the broader housing market moderation that has taken place nationwide.

Indeed, the Vancouver real estate market has eased this year, although prices remain elevated. But industry observers believe there could be more room for a decline, making it a little bit easier for prospective homeowners to get their foot in the door.

A Look at the Vancouver Housing Market

In the Vancouver real estate market, sales are sliding, prices are beginning to come down at a modest pace, and supply is increasing.

In other words, conditions are moderating, allowing prospective homeowners to get involved in one of Canada’s biggest housing markets.

According to the Real Estate Board of Greater Vancouver (REBGV), residential property sales plunged at an annualized pace of 35 per cent, totalling 2,444 in June. This is also down a little more than 16 per cent from May.

Overall, June transactions are about 23 per cent below the decade sales average for this time of the year.

Vancouver real estate prices eased month-over-month, tumbling two per cent to $1,235,900. However, this is still up 12.4 per cent from June 2021, suggesting that the housing sector is still strong.

Here is a look at the overall performance of residential property types in the Vancouver real estate market on a year-over-year basis.

Detached

• Sales: -48.3 per cent to 653 units
• Benchmark Price: +13.4 per cent to $2,058,600

Attached

• Sales: -36 per cent to 726 units
• Benchmark Price: +17.8 per cent to $1,115,600

Apartments

• Sales: 25.3 per cent to 1,774 sales
• Benchmark Price: +12.7 per cent to $766,300

“Homebuyers have more selection…and more time to make decisions than they did over the past year. Rising interest rates and inflationary concerns are making buyers more cautious in today’s housing market, which is allowing listings to accumulate,” said Daniel John, Chair of the Real Estate Board of Greater Vancouver (REBGV), in a statement.

But while housing stocks are improving, it is not because fresh supply is coming online. It has more to do with accumulation, John added.

“We’re seeing downward pressure on home prices as we enter summer in Metro Vancouver due to declining homebuyer activity, not increased supply,” John stated. “To meet Metro Vancouver’s long-term housing demands, we still need to significantly increase housing supply.”

New residential listings, including detached, attached and apartments, tumbled 10.1 per cent year-over-year in June, to 5,489 units. Active residential listings also slipped on an annualized basis of 3.8 per cent, with 20,425 units.

In addition, housing construction activity has slowed this year. According to Canada Mortgage and Housing Corporation (CMHC), housing starts declined 27.6 per cent year-over-year, totalling 2,742 units. Year-to-date, housing starts have dropped 23.4 per cent to 11,710 units, CMHC data show.

Are Interest Rates Weighing on Vancouver Real Estate?

The Bank of Canada’s (BoC) quest to bust inflation has resulted in collateral damage, mainly to the real estate market. By raising interest rates – 100 basis points during the July policy meeting – the central bank has helped deepen the housing market correction. In major urban centres, like Toronto and Vancouver, this is being seen and felt by many on both sides of the transaction.

“Prices are sliding fast, and the exuberance that permeated these markets earlier this year is being replaced by fear,” wrote RBC assistant chief economist Robert Hogue in a recent note. “In the Toronto and Vancouver areas, the decline in activity is quickly becoming one of the deepest of the past half a century.”

Indeed, over the last four months, Vancouver home sales have plunged 40 per cent, and prices have tumbled nearly five per cent in that span. With more tightening expected for the remainder of 2022, economists and market observers think there could be more easing in prices and sales activity heading into 2023.