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A cyclist travels along the separated bike lane on Point Grey Road in Vancouver, B.C., on Thursday January 1, 2015.

DARRYL DYCK/The Globe and Mail

Multiple forces are fuelling the Vancouver area's real estate market, and it is unclear how much impact foreign buyers may be having on prices, according to Canada's federal housing agency.

Low interest rates, robust population and employment growth, limited housing supply and the proximity of protected areas collectively known as the Agricultural Land Reserve are among the reasons real estate in the Vancouver region is so expensive, Canada Mortgage and Housing Corp. said in a report on Thursday.

On July 25, the B.C. government announced a 15-per-cent tax on foreign home buyers in the entity known as Metro Vancouver. The tax took effect on Aug. 2.

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"Although the extent to which wealthy foreign buyers/capital have impacted home prices is still unclear and contested, this is widely believed to be one factor," CMHC market analyst Robyn Adamache said in the report.

Early data from the B.C. government show the number of foreign buyers in the Vancouver area's housing market dropped in the first month after the implementation of the tax, although some of that was due to a rush to close transactions before Aug. 2.

Of the total number of transactions, the proportion of foreign purchasers who closed their deals to buy homes in the Vancouver region was 0.9 per cent between Aug. 2 and Aug. 31, down from 13.2 per cent in the seven weeks leading up to the implementation of the tax, according to the B.C. government.

The price in Greater Vancouver for detached properties sold on the multiple listing service averaged $1.53-million last month, down 16.1 per cent from the peak in January, 2016.

"Sales and prices had already started to dip before the introduction of the foreign buyers tax, so it basically underlined existing trends in the resale market," Ms. Adamache said.

Greater Vancouver had 666 sales of detached houses last month, a 47.6-per-cent decline from a year earlier. Sales also decreased for condos and townhouses, although not as steeply as for detached properties.

"Foreign buyer activity is one of many factors impacting the Vancouver housing market. Equally important are housing and land supply constraints, as well as the economic and demographic fundamentals that drive housing demand," Ms. Adamache said.

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Sales of detached houses, condos and townhouses in Greater Vancouver totalled 2,253 last month, down 32.6 per cent from a year earlier. That followed a year-over-year sales decline of 26 per cent in August.

Metro Vancouver includes most of the Real Estate Board of Greater Vancouver's territory. The Fraser Valley Real Estate Board – which includes Metro suburbs such as Surrey, Langley and White Rock – saw sales fall to 1,305 last month, down 24.4 per cent from a year earlier.

"I've heard many people say that they think people in Vancouver view housing as more of an investment perhaps than in other cities because we've had such a long runup in prices, though we have no behaviour data to show that," Ms. Adamache added in an interview.

She said it is too early to gauge the long-term effects of the B.C. tax on home buyers in the Vancouver region who are not Canadian citizens or permanent residents.

Some observers believe foreign purchasers, notably from China, have played a large role in the high end of the housing market in the city, triggering a chain of events that has increased prices for entry-level homes in the suburbs.

"I think that there probably is some ripple effect, but the magnitude of that is very difficult to determine," Ms. Adamache said.

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The CMHC report said other factors in the market include baby boomers helping their grown children buy their first homes, municipal delays in approving construction projects and a situation in which an estimated 80 per cent of the City of Vancouver's residential land base is zoned for detached houses and duplexes, despite holding only 35 per cent of the population.

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