Housing sales in the Vancouver region tumbled to a 33-year low in March while prices have dropped for 10 consecutive months, after a series of government measures aimed at cooling off what had been a red-hot market.
“The fact that we have very slow sales volume suggests that we will likely see continuing price declines,” real-estate economist Tom Davidoff of the University of British Columbia’s Sauder School of Business said in an interview on Tuesday. “Typically, sellers will to have adjust prices down to match what they can get.”
He made the comments after the Real Estate Board of Greater Vancouver reported that the 1,727 sales in March for various housing types were the lowest for that month since March, 1986, when 1,367 properties changed hands.
Total residential sales last month decreased 31.4 per cent compared with a year earlier, and were 46.3 per cent below the 10-year regional average for March.
The benchmark price (an industry representation of the typical home sold in an area) for all residential types in the Vancouver area last month declined 7.7 per cent compared with a year earlier. In March, the benchmark price for detached homes, condos and townhouses fell month over month for the 10th consecutive time, dipping to $1,011,200 after setting a record high of $1,094,000 last May.
Industry officials say provincial and federal factors in particular have combined to corral what had been a runaway market, in which prices skyrocketed from mid-2013 to mid-2016.
“For three years, governments at all levels have imposed new taxes and borrowing requirements onto the housing market,” Greater Vancouver board president Ashley Smith said in a statement.
The previous BC Liberal government introduced a foreign-buyers tax of 15 per cent in the Vancouver region in August, 2016. The BC NDP government raised the foreign-buyers tax to 20 per cent from 15 per cent in February, 2018, while expanding it 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 B.C. taxes aimed at higher-end properties.
The federal banking regulator implemented a stress test on Jan. 1, 2018, making it tougher to qualify for mortgages.
Josh Gordon, assistant professor at Simon Fraser University’s school of public policy, said the annual speculation and vacancy tax announced by the NDP minority government in February, 2018, sent a signal to investors and vacation-property buyers outside the province that they aren’t welcome unless they rent out their properties.
“The tax has discouraged the inflow of foreign money into the market and thereby changed speculative expectations,” Prof. Gordon said in an interview. “The pricier areas weren’t based on local incomes.”
Total listings have swelled for detached homes, condos and townhouses, with the number of properties for sale jumping 52.4 per cent over the past year to 12,774.
The large amount of unsold properties has swung the market in favour of sellers, economists say.
The Vancouver region’s condo market, which initially escaped the downturn that began hitting the detached category in late 2017, has been weakening since mid-2018.
The average time on the market before Greater Vancouver condos sold surged to 37 days last month, compared with 18 days in March, 2018. The region’s average price for condos sold dropped 9.7 per cent over the past year to $653,705.
In the district municipality of West Vancouver, the benchmark price of detached properties fell to $2,583,600 last month, down 17.1 per cent since March, 2018.
The benchmark price for detached houses sold in Greater Vancouver last month slid to $1,447,100, down 10.5 per cent compared with a year earlier. Over the past year, sales volume in the detached category dropped 26.7 per cent, while condo sales decreased 35.3 per cent.
“The momentum is definitely downward,” said Peter Norman, chief economist at Altus Group, a real estate data and advisory firm.
There could be further room for prices to fall later this year, given that the housing market is still up significantly compared with five years ago, he said.
While an array of B.C. taxes have contributed to dampening interest from buyers, Mr. Norman sees support on the demand side through a strong provincial economy. “There is still job growth and in-migration, and usually, those ingredients are not precursors to a crash,” he said.
Altus Group forecasts 22,400 housing starts in the Vancouver region this year, down 4.3 per cent compared with 2018.