Housing sales in the Vancouver region slid to a 10-year low as a series of federal and provincial measures have dampened demand.
Mortgage rates have steadily risen since mid-2017 and the federal banking regulator implemented a stress test on Jan. 1, 2018, making it tougher for buyers to qualify for mortgages. “Any time you start reducing people’s ability to increase their leverage, that is going to have an impact on what they can afford,” Steve Saretsky, a real estate agent who also writes a housing newsletter, said in an interview on Tuesday.
Provincially, the B.C. NDP government raised the foreign-buyers tax to 20 per cent from 15 per cent in February, while expanding that tax beyond the initial target of the Vancouver region. Other provincial factors include what the NDP calls a speculation and vacancy tax targeted primarily at out-of-province residents, and other B.C. taxes aimed at higher-end properties.
Home sales in Greater Vancouver last month were 34.7 per cent under the 10-year average for November.
Andy Yan, director of Simon Fraser University’s city program, said the B.C. government wants to corral what had been a runway housing market in the Vancouver region. Mr. Yan said the NDP’s “political signalling” with moves designed to lower prices and deter speculation have been enough to spook some buyers who might otherwise have snapped up properties, but the affordability crisis lingers. Even in suburbs such as Coquitlam, prices for condos are well more than $500,000.
The real estate market surged from 2013 until mid-2016. The previous BC Liberal government introduced the foreign-buyers tax in the Vancouver region in August, 2016, helping to temporarily cool off Canada’s most expensive housing market.
After a choppy recovery in 2017 and the first half of 2018, housing sales and prices began falling noticeably in mid-2018. Mr. Saretsky said the residential market is undergoing what will likely be a drawn-out slowdown that will extend into 2019. “It’s kind of like a slow bleed-out,” he said.
Total residential sales last month declined to 1,608 transactions, down 42.5 per cent when compared with 2,795 in November, 2017, according to the Real Estate Board of Greater Vancouver. Last month’s regional sales were the lowest for November since 2008, when only 874 properties changed hands in that month during the recession.
The benchmark price (an industry representation of the typical home sold in an area) for all residential types in Greater Vancouver has declined for six consecutive months, hitting $1,042,100 last month after setting a record of $1,094,000 in May.
“Home prices have declined between four and seven per cent over the last six months, depending on property type,” board president Phil Moore said in a statement, adding that prospective buyers are taking a wait-and-see attitude. The number of listings in Greater Vancouver totalled 12,307 last month, up 40.7 per cent from a year earlier.
Detached houses on Vancouver’s west side and in the municipality of West Vancouver have seen the sharpest price drops, with benchmark prices tumbling more than 10 per cent over the past year.
The provincial government announced plans earlier this year to impose surtaxes on homes assessed at more than $3-million, hitting the west side, where benchmark prices for detached houses have decreased to $3,205,500.
While benchmark prices for condos and townhouses in Greater Vancouver have decreased in the second half of this year, they are still 2 per cent higher than in November, 2017.
Average prices year-over-year for condos sold in the region are up 2.4 per cent while townhouses dipped 2.7 per cent and detached properties slipped 1.1 per cent.
Property sales fell 41 per cent in the Fraser Valley Real Estate Board’s territory, which includes the sprawling Vancouver suburb of Surrey. The area saw 1,028 transactions in November, compared with 1,743 sales in the same month of 2017.
The benchmark price for detached houses sold in the Fraser Valley’s area was $976,200 last month, unchanged from a year earlier.