I think changes in the Chinese economy will also push up inflation as we move forward. A 2007 Report by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) has said inexpensive Chinese exports have kept inflation around the world in check. As China develops though, the cost of China’s labor becomes more expensive, pushing up costs for the huge amount of simple products it exports around the world.
How does this relate to Vancouver Real Estate?
Inflation will cause prices and rents in Vancouver to increase while fixed rate mortgages locked in before inflation hits will decline in real and nominal value at an accelerated rate. Equity will increase at an accelerated rate for those with fixed rate mortgages.
Variable rate mortgage holders would see their rates and possibly payments rise in line with Bank of Canada rate increases to combat inflation.
If inflation does re-appear it will be very interesting time in the Vancouver Real Estate Market.
I’d love to hear everyone’s thougths!