THE LAPSE OF LUXURY
High-end home prices slide
It’s tough times at the top for Vancouver’s priciest homes.
Prices in the top end of residential real estate in the city have dropped 7.6 per cent over a sixmonth period to March, making Vancouver the second-worst performer during that period among global cities, according to the Knight Frank Prime Global Cities Index, which monitors price growth of the top five per cent of the housing market in 43 cities.
Only Stockholm performed worse than Vancouver, recording a nine per cent plunge in price while Seoul and Cape Town in South Africa topped the list with six-month price growths of 20 per cent and 8.6 per cent.
Data from the Real Estate Board of Greater Vancouver show a similar downward trend for the singlefamily detached market.
In April, the benchmark price for a single-family detached home in the west side, where Vancouver’s most expensive homes are located, was $3.4 million, a six per cent drop over a six-month period.
Homes in East Vancouver, where the benchmark price is $1.5 million, experienced a 1.4 per cent decrease over the same time period.
April saw more inventory in the detached home market but fewer sales, said REBGV president Phil Moore.
There are approximately 1,800 properties over $3 million currently for sale in the region, with 262 sold between January 1 to April 30 — less than half of the 561 homes sold during the same time period in 2017.
“There’s a lot of a supply and buyers have a lot of choice,” said Moore. “I see more price reductions happening in the high price range. There’s a lot more inventory.”
Factors for the price drop include new mortgage stress tests and hikes in the foreign-buyers tax and the property transfer tax, said Moore.
“We’re starting to see the trend as these new government intervention policies come into play,” he said.
Vancouver’s slower rate of growth is likely the outcome of the province’s “macro prudential measures” and the rising borrowing costs for investors, Kate Everett-Allen, Knight Frank’s head of international residential research, said in an emailed response to questions.
In Vancouver, the study looked at properties starting at about $3.5 million, she said.
The quarterly Knight Frank report shows prices in Vancouver for this top segment stayed relatively stable on a year-over-year basis, posting a modest 0.2 per cent increase and placing it 31st on the index.
Steve Saretsky, of Sutton Group West Coast Realty, said the downward push on Vancouver’s detached home prices has been going on for a while.
“Most people are just figuring it out now,” he said. “I think realtors know prices have been dropping for about a year. If you have a 30-year low in sales, it’s no surprise prices are falling.”
Saretsky said the trend started well before the NDP provincial government implemented its market-cooling measures. He believes the price drop has more to do with the introduction of the foreign buyer tax and stricter Chinese government capital controls which contributed to a reduction in foreign investment in Canada.
He said the decline in price is a “good thing” for the long-term sustainability of the province and the city.
“People may be a bit worried about equity but housing booms and busts are part of a real estate cycle. It is good to have pullbacks,” he said.
Vancouver Mayor Gregor Robertson called the decline “a necessary step” to restoring stability in the local housing market.
“We welcome a more stable period now,” he said in an interview at Bloomberg News headquarters in New York Tuesday. “There’s some concern if values drop and impact homeowners’ equity, but the gains have been so massive for so many years that some softening was to be expected.”