Vancouver real estate sales to cool down, but upticks elsewhere
Canada’s two hottest luxury real estate markets, Vancouver and Toronto, will see “a clear divergence” in the coming months, a new report predicts. Here are a few key things to know about the fall forecast from Sotheby’s based on data for Vancouver, Greate
1 Vancouver cools down
The 15 per cent foreign buyer tax introduced in B.C. over the summer “cast uncertainty into the market and is expected to moderate Vancouver’s $1 million-plus sales this fall,” the forecast states.
Sales volume has already showed signs of cooling in Vancouver.
“Following frenetic sales velocity and double-digit price gains in Vancouver’s $1 million-plus real estate market through the first half of the 2016, clear signals of self-moderation emerged over the summer,” the Sotheby’s report states.
Comparing August 2016 with the same month last year, the number of single family home sales over $1 million declined 65 per cent, while top-tier condominium sales were down 49 per cent, the report said.
2 Toronto remains hot
Meanwhile across the country, the Greater Toronto Area is coming off a “more active summer market than anticipated,” the report says, “foreshadowing a brisk fall market.”
July and August sales were up 83 per cent year-over-year in the country’s largest housing market, and luxury home sales over $4 million rose 74 per cent over the same period.
3 Interest in other markets
Since the implementation of B.C.’s foreign buyer tax, other markets have seen signs of an uptick in interest from international investors.
The Sotheby’s report says while the long-term impact of the tax is yet to be determined, industry observers are seeing “newly redirected interest from international investors,” in other markets, including Toronto, Montreal and Calgary.
Sotheby’s notes the Chinese international property website Juwai.com saw “a shift in user behaviour” last month, when Vancouver saw an 81 per cent year-over-year decrease in searches for housing over $1 million, while similar searches for Seattle increased 143 per cent in the same period.
4 Vancouver prices steady
But while B.C.’s sales activity and velocity are expected to moderate in the fall, prices are a different matter.
Sotheby’s projects affordability in Vancouver will “remain a critical concern,” adding: “recent policy measures are not expected to significantly dampen real estate prices this fall.”
5 All eyes on unemployment
Local unemployment trends are expected to play a “key role” in metropolitan real estate markets in the final months of 2016.
Toronto’s August unemployment rate remained close to the national average of 7 per cent, while Vancouver’s rate dropped to 5.4 per cent, and Sotheby’s predicts strong market health for both.
But Calgary is a different story. A “steeply rising” unemployment rate (9.5 per cent in August 2016, up from 7.7 per cent in January 2016) is expected to “dim confidence this fall” in the city.