The small B.C. city of Kelowna has become the second most expensive place to buy a home in the country, behind Vancouver, according to a new report.

A ReMax Canada survey suggests the average house price in the Okanagan city has jumped to $422,000 this year, up from $355,000 last year — moving it ahead of Victoria, Toronto and Calgary.

The increase is the result of big lakefront houses, says Kelowna realtor Cliff Shillington.

"Every single property on the lake is going to be over a million dollars. We're selling land on the lake. An old knockdown, and it's over a million dollars. Let's face it. We're a lifestyle destination."

Another realtor, Alex Marriott, is selling a 7,000-square-foot mansion with a 17-car garage, which is the show home of a new development overlooking Okanagan Lake.
 
"These homes start at $1.5 million each and go up to $7 million and over."

Just five years ago, lakeview houses in the hills above Kelowna were much cheaper, selling for less than $200,000.

Marriott says wealthy people around the world are just learning about Kelowna, which he calls the "Riviera" of Canada.
   
"We are now getting calls from the U.K., Hong Kong, we're getting calls from Geneva, Switzerland."
 
ReMax is forecasting another nine  per cent increase in Kelowna prices next year.
 
The average house price in Vancouver is $503,000.