Vancouver’s luxury real estate loses its steam

The party’s over for now for those sitting on Vancouver’s most expensive properties.

Prices at the top end of the market plunged 7.6 per cent in the six months to March, making it the world’s second-worst performer during that period, according to the latest global survey of prime properties by Knight Frank LLP.

Only Stockholm did worse, falling 9 per cent, while Toronto rose 6 per cent and the top gainer was Seoul.

The findings — based on the top 5 per cent of the housing market in each city — lend support to anecdotal evidence of a slowdown in Vancouver’s luxury segment after the hike of a tax on foreign buyers to 20 per cent from 15 per cent in February, the introduction of a speculation tax, and rising interest rates.

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. “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.”

The Pacific Coast city’s slower rate of growth is likely the outcome of British Columbia 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 Vancouver, the study looked at properties starting at about $2.7 million, she said.

Just two years earlier, Vancouver had topped global rankings in the same survey after surging 26 per cent over a 12-month period and before the provincial government first imposed a foreign buyers’ tax in August 2016.