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Vancouver Real Estate Slowdown shows Vancouver foreign buyer tax is working: B.C. premier

Real estate sign in the Kitsilano neighbourhood in Vancouver, British Columbia, Sunday, June 9, 2013. Sales of detached houses in the Vancouver region have dropped 66% in the first two weeks of August compared to last year, after quick introdction of the new foreign-buyer fee.

Rafal Gerszak/The Globe and Mail

The plunge in real estate sales and deceleration in price increases in the Vancouver area last month were exactly what the government was trying to manoeuvre, and Premier Christy Clark says there will be no changes to the foreign-buyers tax.

Ms. Clark told reporters on Tuesday that her government will not reconsider the 15-per-cent tax that is intended to calm what she called a "distorted market."

"The prices were going up way too fast and if we helped slow that down, that's good," she said.

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The Real Estate Board of Greater Vancouver announced last Friday that August sales were down by 26 per cent compared with last year, signalling a return to more typical levels.

The largest drop in property sales last month was among detached homes, with a decrease of 44.5 per cent.

Along with the slowdown in sales, the board said prices that were once skyrocketing may be tapering off.

The average price of a detached home fell to $1.47-million last month, a 16.7 per cent drop from the month before. Dan Morrison, president of the real estate board, said on Friday that the region was seeing fewer sales of the highest-priced detached homes and fewer sales of detached homes compared with other kinds of housing, causing average prices to slump.

But the real estate board prefers to measure prices using the benchmark price, which is a representation of a "typical" property sold in the area.

The benchmark price for detached properties reached $1.57-million in August, representing a 12-month increase of 35.8 per cent. However, compared with July, the figure was down 0.1 per cent.

Ms. Clark said it is too early to tell what the impact of the foreign-buyers tax and a luxury sales tax on homes priced over $2-million has had on the market.

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While the premier said changes to the new legislation are not an option, the government will be doing even more to try to address housing affordability in Metro Vancouver.

"We need to make it easier for first-time home buyers to get into the market and that's not just about price."

Housing supply is a contributing factor to the problem, Ms. Clark said, with prospective developments "languishing" in city planning departments for years.

Without giving away specifics, Ms. Clark said her government will look at ways to ensure cities are "moving some of that inventory" and increasing supply.

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