The city of Vancouver, BC is one of the most beautiful cities in the world. It keeps ranking in the top 3 worldwide on many global lists of the best cities to live in. But beautiful Vancouver is also one of the most expensive cities in North America. The city dropped three places on Mercer’s 25th annual Cost of Living survey, but remains the most expensive Canadian city to live in.
High property costs, no salary increases, and a rise in grocery and everyday prices make Vancouver a very expensive city to live in.
Apart from the beautiful nature and images you find of this beautiful city, keep reading for a deep dive and a more realistic idea of what to expect while living in this city.
Higher property costs, rent is the most expensive
One of the main reasons is that Vancouver is a city constrained by the ocean from multiple sides, which makes it hard to “make more land”. So the downtown core is densely populated and the land is very expensive. Developers say they aren’t able to make way to more affordable housing, since it is not profitable for them to do so.
Investing in real estate helped wealthy people from other countries find a way to park their money. Foreign investment became a force in local economics and lead to surreal house price inflation. For example, single detached houses that would sell for $250–$400K elsewhere in Canada are listed in Vancouver for over $2,000,000.
Take a small trip around the city and you will notice many apartments and condos in downtown Vancouver to be hardly occupied or are just wholly vacant. This gives you a clue about how much of the city’s real estate is used solely as a fund-holding investment, as opposed to live-in residential real estate. This low availability also helps raise the housing prices even higher. These days with technology, foreign investors don’t even need to step foot into Canada to snap up some of the most exclusive real estate in B.C.’s lower mainland. Despite the many problems the real estate industry in B.C is currently facing, either from shady transactions or in the regulations, people keep pouring into the city and into the Vancouver real estate industry.
On another hand, construction costs have gone up significantly in the past few years, and real estate developers will aim to make the highest profit. This is even more visible when you calculate the increase in costs like insurance, homeowner protection, project management, appraisal, legal, and other required expenses.
Development costs, engineering fees, permits, municipal fees, inspection, and administration fees, property taxes, marketing and commission costs, and numerous other expenses are all important to be included in the final offer price of the developed unit. They add up to significantly increase the overall prices of any development in the city.
When we first moved, the one bedroom apartment in the downtown core cost around 18,000$ per month. This was surprising at first, but now we feel lucky we got our first apartment for that much! You only have to do a brief search online, on the many real estate company websites and platforms to notice a major increase in costs, with a one bedroom apartment similar to ours going for at least 2000$ a month.
On the other hand, companies don’t pay high salaries for people to be able to afford such exuberant real estate prices.
Wages and salaries
Although Vancouver is compared to other big cities in North America like New York and San Fransisco, the salaries over here are not as high.
The majority of jobs in Vancouver and B.C in general are full-time, helping project Canada as a place with a low unemployment rate and a record number of residents working. But an analysis of the federal labour force survey shows that part-time jobs have steadily grown here, from 15 per cent in 1976 to nearly a quarter of all jobs in 2016. Data from Statistics Canada showed that of the 72,000 new jobs created in 2016, more than half were part-time.
These part-time jobs are there to help sustain regular working people in a city with increasing costs of living. People need to pay their bills and want to be able to afford the extra outing or eating out at least once a month. But things aren’t looking up for the regular working couple. Take a look at the average salary, it is around $73,000 for millennial couples. If we compare it to the average cost of a home in and around the city, it is close to $800,000! This makes it very clear why most people are going back to work additional part time shifts to be able to live.
Some counter the above by mentioning the tech sector in the city. Indeed, it is a growing field of business and it is very well paid compared to other big cities in Canada. But aside from the wages and salaries, there are a few other aspects that make Vancouver more expensive.
Gas prices & driving insurance
Drivers in Metro Vancouver know they pay higher prices for gas. Gasoline in the Vancouver area is the most expensive in Canada and getting more expensive every day.
On a single liter of Gas, drivers here pay the following list of taxes:
- Provincial motor fuel tax (Metro Vancouver): 1.75 cents
- Provincial motor fuel tax (everywhere else in B.C.): 7.75 cents.
- B.C.’s carbon tax: 8.89 cents.
- The B.C. Transportation Finance Authority tax: 6.75 cents.
- TransLink tax (If you live in Metro Vancouver): 18.5 cents
- Transit tax (If you live in Victoria): 5.5 cents.
- Federal excise tax: 10 cents.
- Finally, pay the five per cent Goods and Services Tax (GST) on top of the total price.
In total, for only one liter of gas, a driver in Vancouver is paying 60 cents in taxes. On top of that, all gas and diesel that is sold in B.C. must include renewable materials and meet the province’s carbon targets. The emission standards in B.C. are the highest you’ll find anywhere. As regulations increase, so does the cost.
Other factors like the global markets, time of year and the strength of the Canadian dollar also affect the cost of gas.
On another hand, when owning a vehicle, residents will have to pay insurance. A report on CTV News stated that B.C. drivers are paying as much as 42% more than Albertans for insurance.
The amount you’ll pay for car insurance depends on your driving record (the better your record, the lower your premium), How much you use your car (you pay less if you drive occasionally), and surprisingly the location! Yes, urban drivers pay more than people living in small towns and rural areas.
Additionally, the Insurance Corporation of British Columbia’s (ICBC) basic insurance required for all motor vehicles registered in British Columbia includes third-party liability for injury costs and vehicle damage caused by insured drivers. It also includes so-called No Fault benefits paid to drivers and their passengers regardless of fault.
There are other factors that affect the cost as well. Your age, gender, the car you drive, your credit and of course the type of insurance you want to have. According to a report from the Insurance Bureau of Canada (IBC), British Columbia drivers pay $1,832 on average for their insurance coverage annually (Up from $1,680 in 2017).
Food prices are increasing
According to a report by Dalhousie University’s Agri-food Analytics Lab, the price of food has been steadily increasing in the last decade – and the COVID-19 pandemic is only accelerating this trend.
“The point of the report is to show that really over the last 10 years, at least, the food inflation rate has outpaced the general inflation rate”
Sylvain Charlebois, a professor and senior director of the lab
The price of a typical grocery basket has increased by approximately 240 per cent since 2000 across Canada and not just locally in B.C. The most recent inflation rate, in October, was 1.9 per cent, compared with a 3.7 per cent rise in food prices this year. Vegetable prices alone rose a staggering 12 per cent in 2019. But while the increase in prices is not welcome news, items like sugar, flour and peanut butter remain fairly cheap.
In addition to the Coronavirus pandemic, the environmental challenges that the world is facing, like droughts and forest fires, is helping this speedy rise in prices. Today, Canadians and Vancouverites in particular are looking more into coupons, flyers and daily offers on regular items in their shopping lists to save more every day.
A lot of young people in Vancouver are attracted by the lifestyle and the beautiful environment. Some are also attracted by a robust high tech community that’s growing every day. Sharing accommodation with friends near their work and using public transportation has become the norm. It takes a bit more work, money and effort nowadays, but if you can manage it, you won’t regret choosing it as a place to settle down.