Home sales in the Vancouver region have tumbled to their lowest level in six years while prices flatline, with listings languishing on the market.
There have been fewer home buyers recently but prices tend to be slow to react before declining, said real estate economist Tom Davidoff of the University of British Columbia’s Sauder School of Business.
“Prices are slow to adjust,” Mr. Davidoff said in an interview on Wednesday. “But there are reasons for optimism if you’re a millennial buyer. The price momentum has certainly slowed and there is reason to think you will see a further softening of the market going forward.”
Total residential sales volume last month fell to 2,425 transactions, down 37.7 per cent from 3,893 sales in June, 2017. Last month’s sales, the lowest for June since 2012, were 28.7 per cent under the 10-year average for the month, according to the Real Estate Board of Greater Vancouver.
“Before prices fall, you tend to see sales activity fall first,” Mr. Davidoff said.
The benchmark price for all housing types in Greater Vancouver has flattened, slipping to $1,093,600 − down $400 from the previous month but up 9.5 per cent since June, 2017.
The benchmark price is an industry representation of the typical home sold in an area.
“Buyers are less active today. This is allowing the supply of homes for sale to accumulate to levels we haven’t seen in the last few years,” board president Phil Moore said in a statement.
The total number of listings soared to 11,947 last month, up 40.3 per cent from 8,515 in June, 2017.
“Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buyer activity today,” Mr. Moore said.
Prices were flat month-over-month for townhouses sold, with the benchmark reaching $859,800 in June, up $300 from May and a 15.3-per-cent gain over the past year.
Prices began surging regionally in mid-2013. Those huge spikes ended in mid-2016, shortly before the B.C. government introduced the foreign-buyers tax in August of that year for the Vancouver area.
The average price for detached houses sold in Greater Vancouver reached $1,754,795 last month, up 2.4 per cent from a year earlier. The region’s condo market saw a 5.7-per-cent gain over the past year to hit an average of $693,626.
The Fraser Valley Real Estate Board saw a total of 1,452 sales last month, down 43.5 per cent from a year earlier. In the board’s territory, which includes the sprawling suburb of Surrey, the average price for all residential property types dipped to $748,709 last month, down 0.4 per cent from June, 2017.
On the higher-end part of the market, prices are dropping. On Vancouver’s west side, the benchmark price for detached properties slipped to $3,392,500 in June, down 1.1 per cent over the past month and a 6.5-per-cent decrease over the past year.
An annual 0.2-per-cent property surtax will be imposed by British Columbia’s NDP government on the portion valued above $3-million and up to and including $4-million; for the portion above $4-million, a 0.4-per-cent annual rate applies.
For example, the owner of a property assessed at $4-million will fork over extra taxes of $2,000 next year, while the owner of a $6-million home will cough up an extra $10,000.
The NDP got the idea of the surtax from Rhys Kesselman, professor emeritus at Simon Fraser University’s School of Public Policy, who proposed the concept in early 2016, although he envisaged a formula that would have lessened the surtax burden on homeowners who pay B.C. income tax.
Mr. Davidoff, who supports the surtax, has been the target of booing at protests against the NDP’s housing policies.
He said many homeowners perceive their large price gains are the result of hard work and skill in investing in housing as an asset, but that clashes with the NDP’s view that the time is ripe to tax millionaires who benefited through sheer luck from the real estate boom. “Of course you want to avoid taxing those who scrimp and save,” Mr. Davidoff said.
Benchmark prices in Greater Vancouver for detached houses are up 0.7 per cent over the past year to $1,598,200. Whistler, B.C., has been one of markets escaping the cooling-off trend, with the benchmark price for detached properties rising 9.5 per cent over the past year to hit $1,716,200 in June.