Buyer ‘fear’ grips housing market
Home sales in Vancouver decline 24 per cent over worries about cost
Housing sales in the city of Vancouver slumped 24 per cent over the summer as buyers became wary of paying too much, according to a report from Sotheby’s International Realty Canada.
Sotheby’s, which studied the sale of all types of housing units valued at $1 million or more, said the slowdown extended broadly across all types of housing. And Sotheby’s said the slowdown is leading to lower prices.
There is “additional nervousness in the (B.C.) market,” said Sotheby’s CEO Brad Henderson, who blames the controversy over the provincial speculation tax.
“I think ‘fear of missing out’ has translated into the fear of paying too much if you’re a buyer and the fear of selling too low if you’re a seller,” said Henderson.
In markets such as Montreal and Toronto, by contrast, sales of properties over $1 million rose or rebounded in July and August.
In Vancouver, sales of such properties dropped to 434 units in July and August, a 24 per cent drop from the same months in 2017, Sotheby’s said, based on Multiple Listing Service records. Sales of properties worth $4 million or more fell even more sharply in Vancouver in that period, down 33 per cent with a total of 31 sales.
And Sotheby’s said the decline extended into the previously more active condominium segment and continued for the first weeks of September, thus “darkening the forecast” for fall. In the condominium segment, Sotheby ’s counted just 162 sales over $1 million in July and August, a 21 per cent drop from the same months in 2017.
Elsewhere in the country, even in the depressed Calgary market, Henderson said sales over $1 million were up despite tighter federal mortgage rules.
The big difference in B.C., Henderson said, remains the foreign buyers tax implemented in 2016 and extended to other parts of the province this year and the new provincial speculation tax “that has created additional nervousness in the market.” Housing sales across Metro Vancouver north of the Fraser River fell by more than one-third in August, according to the Real Estate Board of Greater Vancouver, with 1,929 units selling compared with 3,043 in August 2017.
Prices declined in all property types, including condominiums and townhouses. The board’s benchmark or “typical” price for detached homes was down 10.3 per cent to $3.3 million in August compared with a year earlier. The benchmark for a westside Vancouver apartment-style condominium was $825,000 in August, a 2.4 per cent drop in the past three months, though the price is still almost five per cent higher than a year ago.
“Home buyers have been less active in recent months and we’re beginning to see prices edge down for all housing types as a result,” Phil Moore, president of the real estate board said in a news release.
“We’re not seeing multiple offers, we’re not seeing conditions (to purchases) waived before any condition period ends,” Henderson said. “So people have more of a chance to look at what they ’re buying, to get building inspections.”
Henderson said “it is fair to say some foreign buyers have withdrawn from the Vancouver market,” particularly those who don’t already live or pay taxes here.
But Henderson said many potential sellers are in a position to wait, which could cushion the decline in prices. However, there will be “examples where someone who wants to sell or has to sell” will be motivated to take a lower price.