A crucial factor in the slowdown is increased uncertainty among overseas nationals in the wake of the new 15% tax on foreign home buyers, experts say
In its latest set of data released on September 2, the Real Estate Board of Greater Vancouver announced that August sales in the city have plummeted to a four-year low, right as B.C.’s housing market was grappling with the newly implemented 15 per cent tax on foreign home buyers.
Vancouver’s sales volume for the previous month dropped by 26 per cent on a year-over-year basis, down to 2,489 detached homes, condo units, and townhomes sold in August. The most significant decline has been observed in the detached sector, which saw 44.6 per cent less sales (for a total of only 715 properties) last month, The Globe and Mail reported.
According to the Board, a leading driver of this development is the noticeable slowdown in multi-million-dollar transactions, which stemmed from increased uncertainty among foreign and local would-be buyers.
The data added that a 0.3 per cent drop in the average sale value of detached homes in the city to $1.47 million was observed last month. To compare, the benchmark price of homes in the Greater Vancouver area stood at $1.58 million in August—up 35.8 per cent year-over-year, but down 0.1 per cent from July.
“The foreign buyers are re-evaluating, and so are local buyers,” Board president Dan Morrison said. “But remember that August last year was one of highest for sales for that month.”
However, while the declines might be seen as troubling, the actual numbers were actually far less than the dire predictions of 60 per cent crashes made last month in the wake of the new tax, which was implemented on August 2.
But Royal LePage agent Adil Dinani warned that the slowdown is unsustainable in the long term, noting that the levy has drained significant demand by scaring off foreign nationals and speculators. Plenty of listed detached properties in the city are now taking far longer to get sold off, and many of these are getting offers way below their asking prices.
In addition, overseas investors—Chinese, in particular—have become far more cautious about spending on Canada’s hottest housing market, and instead have taken to haggling for discounted sales and tacking on extra pre-purchase conditions like free inspections, Dinani added.
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Vancouver’s sales volume for the previous month dropped by 26 per cent on a year-over-year basis, down to 2,489 detached homes, condo units, and townhomes sold in August. The most significant decline has been observed in the detached sector, which saw 44.6 per cent less sales (for a total of only 715 properties) last month, The Globe and Mail reported.
According to the Board, a leading driver of this development is the noticeable slowdown in multi-million-dollar transactions, which stemmed from increased uncertainty among foreign and local would-be buyers.
The data added that a 0.3 per cent drop in the average sale value of detached homes in the city to $1.47 million was observed last month. To compare, the benchmark price of homes in the Greater Vancouver area stood at $1.58 million in August—up 35.8 per cent year-over-year, but down 0.1 per cent from July.
“The foreign buyers are re-evaluating, and so are local buyers,” Board president Dan Morrison said. “But remember that August last year was one of highest for sales for that month.”
However, while the declines might be seen as troubling, the actual numbers were actually far less than the dire predictions of 60 per cent crashes made last month in the wake of the new tax, which was implemented on August 2.
But Royal LePage agent Adil Dinani warned that the slowdown is unsustainable in the long term, noting that the levy has drained significant demand by scaring off foreign nationals and speculators. Plenty of listed detached properties in the city are now taking far longer to get sold off, and many of these are getting offers way below their asking prices.
In addition, overseas investors—Chinese, in particular—have become far more cautious about spending on Canada’s hottest housing market, and instead have taken to haggling for discounted sales and tacking on extra pre-purchase conditions like free inspections, Dinani added.
Related Stories:
Lower prices in Vancouver could hurt major banks significantly - analysts
The tripartite engine of growth: Foreigners, speculation, and cheap debt
Vancouver market might not actually be in a bubble
