A new report by the B.C. Real Estate Association says concerns over foreign buyers inflating house prices in Metro Vancouver are overblown and the real culprits are densification and geography.

"When we look at this idea that foreign investors are such a dominant force in the housing market that they're driving up housing prices and eroding affordability for first-time buyers, we find that there's no evidence of that," said Cameron Muir, chief economist with the BCREA.

Muir acknowledges data on foreign investment in the region is scarce. However, he says the information that is available suggests the level of foreign investment is not enough to have a major impact on the housing market.

"Foreign investment is less than five per cent of the market in Metro Vancouver, and through our collection of available data and analyses, we haven't found one data point or one piece of analysis that points to foreign investment as outside of five per cent of overall sales activity in the region."

The report says these numbers are not that far off from other cities across Canada.

Detached homes a 'luxury product'

The BCREA says the reason the benchmark price for a detached home in Metro Vancouver is more than $1.1 million is because geography constrains the region on all sides, thereby limiting the amount of developable land.

"Single, detached homes — whether you're living in Surrey or the City of Vancouver — are facing much more upward pressure than the multi-family stock, because multi-family housing is being replicated in the landscape," said Muir.

"We see over 80 per cent of new housing starts are multi-family. That's adding the supply that's needed for the growing population in a region with a constrained land supply.

"Let me put it this way, single, detached homes throughout Metro Vancouver now are increasingly becoming a luxury product."

The good news, Muir says, is prices for apartments and other multi-family housing have remained relatively stable over the past five years — climbing only about seven per cent across the entire region.

And, in places like Langley and Surrey, prices are actually down as much as 10 per cent.

"Combine that with rising wages and lower interest rates, and apartments are more affordable today than they were five years ago," says Muir.