Van­cou­ver home price surge raises labour cost

Financial Mirror (Cyprus) - - FRONT PAGE -

There is a wor­ry­ing trend in Van­cou­ver, where sky-high hous­ing prices are forc­ing many young pro­fes­sion­als out of the city and into long com­mutes from far-flung sub­urbs, with some choos­ing just to leave the re­gion al­to­gether.

That has busi­ness groups rais­ing the alarm about Van­cou­ver’s abil­ity to at­tract and re­tain the tal­ent needed to foster lo­cal suc­cesses.

Van­cou­ver has long boasted Canada’s costli­est hous­ing. But low in­ter­est rates and strong for­eign de­mand, es­pe­cially from Chi­nese buy­ers, have helped drive the cost of a typ­i­cal de­tached home up nearly 30% in the last five years.

The av­er­age Van­cou­ver-area prop­erty - in­clud­ing houses, town homes and con­dos - sold for C$828,937 ($714,786) in Novem­ber, com­pared with C$580,326 in Toronto, ac­cord­ing to the Canadian Real Es­tate As­so­ci­a­tion. In Seat­tle, on the West Coast of the U.S., with mas­sive em­ploy­ers such as Boe­ing, Mi­crosoft and Ama­zon in the area, the me­dian sale price was $436,250 (C$507,184).

On Van­cou­ver’s de­sir­able west side, the me­dian sell­ing price for de­tached homes rose to C$2.6 mln in Novem­ber.

Gov­ern­ment data shows the migration of 25 to 44-yearolds out of Van­cou­ver to other prov­inces has out­paced those mi­grat­ing in from else­where in Canada over the past three years, erod­ing a key work­ing-age de­mo­graphic.

Van­cou­ver’s ex­pen­sive hous­ing also makes it tough for com­pa­nies to bring in new tal­ent from other re­gions, in par­tic­u­lar se­nior ex­ec­u­tives.

And Van­cou­ver is not alone. New York, Lon­don and Sin­ga­pore have long been popular with for­eign in­vestors, driv­ing up the cost of living for lo­cals. But while those cities are global fi­nan­cial hubs and have many bankers with big com­pen­sa­tion, Van­cou­ver’s econ­omy re­lies more on tourism and a cycli­cal re­sources in­dus­try.

The me­dian fam­ily in­come in Van­cou­ver in 2012, the last data avail­able, was just C$71,140 a year, the low­est of any ma­jor city in Canada, putting home own­er­ship far out of reach for most. The me­dian in­come in Regina, by com­par­i­son, was C$91,200, while Toronto fam­i­lies make just a bit more than Van­cou­ver fam­i­lies.

Van­cou­ver is work­ing to ad­dress the af­ford­abil­ity gap, but ex­ist­ing ini­tia­tives mainly tar­get lower-in­come fam­i­lies. Rent­ing is a cheaper op­tion in the city of 1.3 mln, with small 2-bed­room down­town con­dos listed for about C$2,000 a month and sub­ur­ban base­ment units avail­able at C$1,200.

De­spite the chal­lenges, nu­mer­ous com­pa­nies in­ter­viewed by Reuters said most of their staff are will­ing to make sac­ri­fices - like long com­mutes or rais­ing kids in shoe­box con­dos - for the ben­e­fit of Van­cou­ver’s mild cli­mate and out­door life­style.

But those same com­pa­nies, such as Van­cou­ver-based re­tailer Moun­tain Equip­ment Co-op, also had ex­am­ples of key hires who ul­ti­mately turned down jobs be­cause of the high home prices.

It’s an is­sue Craig He­mer, an ex­ec­u­tive re­cruiter with Boy­den, has been grap­pling with for the bet­ter part of a decade.

He­mer has learned ways to soften the blow - sell­ing older ex­ec­u­tives on the idea of down­siz­ing to a lux­u­ri­ous down­town condo and con­vinc­ing those with fam­i­lies that sub­ur­ban life of­fers more ameni­ties for kids.

Com­pa­nies too are shift­ing their poli­cies, with some of­fer­ing car al­lowances and tran­sit sub­si­dies. Oth­ers are open­ing small sub­ur­ban of­fices or al­low staff to telecom­mute from home.

But that isn’t al­ways enough, es­pe­cially in Van­cou­ver’s start-up scene. Ex­ec­u­tives say it is easy enough to hire ju­nior staff, but a dearth of ex­pe­ri­enced en­gi­neers and tech­nol­ogy work­ers makes it hard to grow past a cer­tain point.

“There’s just not enough high cal­iber peo­ple here. They all leave when they re­al­ize they can make more money in other cities and live there for cheaper,” said Simeon Gar­ratt, chief ex­ec­u­tive of Spark CRM, a prop­erty-fo­cused tech start-up.

“We de­bate at least once a month whether we should just move to Toronto.”

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