VANCOUVER (NEWS 1130) – Vancouver home prices have dropped for the second consecutive month, according to the latest update from the Teranet Home Price Index.
The city saw the biggest decline in comparison with other parts of the country with a drop of 1.3 per cent and it seems to be on a different track because nation-wide prices increased by 0.2 per cent.
Economist Tom Davidoff with UBC’s Sauder School of Business says the 1.9 per cent drop over two months isn’t a big surprise, since the 15 per cent foreign buyers tax is exclusive to our region. “I think the foreign buyer changes have been dramatic and significant,” says Davidoff. “The tax of course doesn’t exist elsewhere, and as Evan Siddall of [Canada Mortgage and Housing Corporation] has pointed out, there was a slowdown in transactions even before that [tax] came into place.”
He points to demand from overseas as playing a huge factor in these numbers. “My suspicion was that was in part driven by the difficulty of getting money out of China’s regime, No. 1, and No. 2, the loonie actually strengthened between the winter of 2015, 2016, and the late summer — the loonie strengthened. It’s strengthening again and yes, I think weaker foreign demand would be very significant for Vancouver real estate, because I think foreign demand was a very important part of price increases over the last year.”
Davidoff isn’t weighing in with a prediction on where the market is going, but says with the federal government’s restricting mortgage lending and additional condo supply entering the market soon will make it challenging for prices to go up.
Last month, the provincial government released housing numbers for October. Overall, it says about 140 residential property transfers valued at $115 million involved foreign nationals from a total of about 4,700 transfers valued at $3.6 billion. The three per cent rate of foreign purchase is higher than September’s 1.8 per cent rate, but still much lower than the 13.2 per cent rate of foreign investment seen in Metro Vancouver before the government implemented the levy in August.