cheaprealty net

Here you can see the general trend in house prices in the Victoria area over the years. It is interesting to note that prices have gone down previously, usually during times of decreasing unit sales.

The increase in prices in the last 5 years is quite stratospheric, compared to the general trend of the chart. As the local median family income in the area is only around $64,000, the current average housing price is now over 8 X earnings - not as high as in some other bubblicious locales, but higher than ever locally.

Low interest rates in the past few years have helped mask this problem. It remains to be seen if prices will plateau, continue upward or drop back to more reasonable levels. I have spoken to various people who seem to believe the new prices are here to stay due to factors like retirees moving here from elsewhere in Canada, Americans buying, Europeans and Japanese buying holiday homes etc.

The one common thread in these theories is the unshakeable support they show to the current pricing paradigm. Personally, I'd like to see prices fall back significantly. It would be a lot better for the local population if housing was more affordable, and maybe some of the speculative excesses could be wrung out of the local market.

Source for the graph is an Excel spreadsheet compiled from Victoria Real Estate Board statistics.