Greater Vancouver housing sales fell in June to a 19-year low for the month while the benchmark price for a typical home dropped below $1-million for the first time in two years.
Sales of detached homes, condos and townhouses totalled 2,077 in June, down 14.4 per cent compared with the same month in 2018 and 34.7 per cent beneath the 10-year average for June, the Real Estate Board of Greater Vancouver said on Wednesday.
It marked the lowest number of transactions for June since 2000, when 1,985 properties sold.
The residential benchmark price slipped to $998,700, down from a record high of $1.1-million in May, 2018, and the lowest since $992,500 in May, 2017, according to the board. The benchmark figure, an industry representation of the typical home sold in Greater Vancouver, has declined month over month for the 13th consecutive time.
Josh Gordon, an assistant professor at Simon Fraser University’s School of Public Policy, said the BC NDP government’s various tax measures are having their desired impact in cooling what had been Canada’s hottest housing market.
“What’s interesting and revealing is that sales are so weak in the midst of an economy that appears to be doing fairly well in terms of unemployment and so on,” Prof. Gordon said in an interview.
Since February, 2018, the provincial government has rolled out tax measures, including what it calls a speculation and vacancy tax targeted primarily at out-of-province residents who don’t rent out their homes. In addition, there are new taxes on properties valued at more than $3-million, such as an extra land-transfer tax and an annual surtax.
Last year, the province also raised the foreign-buyers tax to 20 per cent from 15 per cent in the Vancouver region while also expanding the tax to other urban B.C. markets.
“There are some international events that might change the dynamics in the Vancouver market, including the events in Hong Kong. But barring unforeseen events, it is likely that prices will continue to trend downwards," Prof. Gordon said.
The region’s benchmark Home Price Index (HPI), which strips out the most expensive properties sold on the Multiple Listing Service, has tumbled 9.6 per cent over the past year. The real estate board uses the benchmark HPI because it believes the index provides a better barometer of trends than average prices, which are skewed upward whenever there is a flurry of high-end sales.
Board president Ashley Smith said in a statement that the “expectation gap" between buyers and sellers lingers, with sellers "often trying to get yesterday’s values for their homes while buyers are taking a cautious, wait-and-see approach.”
The price of detached homes sold in Greater Vancouver averaged $1,486,620 last month, a 15.3-per-cent drop compared with June, 2018.
On Vancouver’s expensive west side, the price of detached properties sold in the first six months of this year averaged $3,119,811, down 17.5 per cent from the first half of 2018, according to data compiled by Macdonald Realty.
Macdonald president Dan Scarrow said the region’s housing market has undergone a dramatic shift since mid-2018.
“It feels really slow, but it’s more of a normalization. The reality is that investors for the time being have stepped to the sidelines and the market is being driven by end users," Mr. Scarrow said in an interview. “During the hot market, everything was selling. But now, if it’s something that’s not livable, that product is going to take a lot longer to sell.”
The Fraser Valley Real Estate Board, whose territory includes the sprawling Vancouver suburb of Surrey, saw 1,306 sales last month, down 10.1 per cent compared with June, 2018. Last month’s sales were the lowest for June since 2000, when there were 1,046 transactions.
Fraser Valley board president Darin Germyn said the federal stress test is another reason for slumping sales. On Jan. 1, 2018, Canada’s banking regulator implemented a stress test, making it more difficult for buyers to qualify for mortgages.
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