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Vancouver house sales hit 17-year low for April as government measures spook buyers

Residential sales in the Vancouver region fell in April to the lowest level in 17 years for what traditionally has been a busy month, as activity slows after a series of government measures designed to cool off the housing market.

“It’s a convergence of government policies, combined with issues of rising consumer debt and stagnating wages,” said demographer Andy Yan, director of Simon Fraser University’s city program.

Mr. Yan said many consumers are opting to stay on the sidelines instead of buying, influenced by government policies that have the net effect of dampening housing sales in urban areas. British Columbia’s NDP minority government has the most aggressive policies, he said.

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The B.C. government said in its Feb. 20 budget that provincial measures include raising the foreign-buyers tax from 15 per cent to 20 per cent while also expanding that tax beyond the initial target of the Vancouver region.

“It’s not a single item on the menu, it’s the combination plate that’s having impacts,” Mr. Yan said in an interview on Wednesday. He added that the City of Vancouver has a tax on empty homes while Ottawa has a stress test that makes it even tougher on borrowers hoping to enter an expensive housing market, exacerbated by higher mortgage rates.

Related: B.C. watchdog probes realtor conduct of Vancouver presale condo flips

Related: British Columbia considers halt to exclusive access for condo presales

Read more: Flipping of condo units by insiders fuels hot Vancouver market

Other factors influencing the market are the provincial government’s plans for what it calls a speculation tax targeted primarily at out-of-province residents. The government announced on March 26 it decided to scale back the impact of that tax, which industry experts describe as largely a vacancy tax on people who pay little or no B.C. income tax.​

The B.C. government also announced an increase to the province’s annual school tax, affecting the portion of the value of a property assessed above $3-million. Other notable tax measures include hiking the property transfer tax on the portion of a home’s sales price above $3-million.

In the Vancouver region last month, prices weakened for detached houses while the condo market stayed hot.

The Real Estate Board of Greater Vancouver saw 2,579 sales of detached houses, condos and townhomes in its territory last month, down 27.4 per cent from 3,553 transactions in April, 2017.

Last month’s total transactions of resale properties marked the lowest level for April since 2,253 homes traded hands in that month in 2001.

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Sales of detached houses in the region last month tumbled 33.4 per cent compared with a year earlier. The price of detached properties sold in April in Greater Vancouver averaged $1,658,958, down 6.1 per cent from $1,767,207 in the same month in 2017. By contrast, the average price of condos sold in the area reached $747,823, up 17.8 per cent year over year.

On Vancouver’s west side, the benchmark price for detached properties slipped to $3,404,200, down 1.3 per cent over the past month and a 2.6-per-cent decrease over the past year. The benchmark price is an industry representation of the typical home sold in an area.

Over all in Greater Vancouver, the benchmark price in April for various housing types rose 0.7 per cent month over month and 14.3 per cent year over year.

Andrew Ramlo, vice-president of market intelligence at real estate firm Rennie Group, said the financial contribution of parents is an often-overlooked factor that has helped fuel the housing market. “First-time home buyers are entering the market with relatively low incomes because they’re young. But many entry-level buyers get a share of their down payments from parents,” he said.

Mr. Ramlo doesn’t think prices in the Vancouver region are poised for a sharp fall, saying there are a large portion of long-time homeowners, aged 55 or older, who have no mortgages or only small debts.

In the market for detached houses in Greater Vancouver, both sales and prices have declined. Prices for condos and townhomes, however, have risen despite decreasing sales.

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In the Fraser Valley Real Estate Board’s territory, there were 1,708 sales last month, or a 23.4-per-cent decline from the 2,230 transactions in April, 2017. The Fraser Valley board, which includes the sprawling suburb of Surrey, said its April sales were the lowest for that month since 2014.

With housing prices within the City of Vancouver being the most expensive in Canada, many buyers have looked to the suburbs. The average price of condos sold in the Fraser Valley’s territory has surged 36.2 per cent over the past year to $417,688.

While average prices for detached houses slid in Greater Vancouver, they rose in the Fraser Valley.

Statistic Canada released data showing that foreign ownership in Toronto and Vancouver are less than five per cent.
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