Home prices in Greater Vancouver are likely to fall by an average of 8.5 per cent in 2017, which would bring values back to the still-high levels seen in the super-hot spring market of 2016, according to a forecast released January 12 by real estate brokerage Royal LePage.
The report predicted that foreign investment will “wane further within the region, due to the recent Land Transfer Tax on foreign nationals and China’s State Administration of Foreign Exchange imposing new, stricter requirements on currency conversions.”
“It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “However, inventory will continue to be the story in the new year, as any movement within the market will be exaggerated at their current, extremely low levels, meaning that if sentiment remains unchanged, conditions could worsen and prices may fall even further.”
The report stated, “Despite the flurry of new policies designed to tame demand and foreign investment in Greater Vancouver, critically low inventory levels have been the predominant factor affecting the region’s market activity and house price appreciation. Market characteristics have melded to create a perfect storm where prospective homeowners are unable to find adequate affordable property due to an extreme lack of supply, and have thus refrained from putting their own homes on the market, causing sales activity to slow further and leading prices to soften.
“While this has caused appreciation to slow across many property types within the Greater Vancouver market, condominiums have remained remarkably resilient in the face of recent conditions due to their relatively better supply and affordability.”
Indeed, Royal LePage predicted that Greater Vancouver’s robust condominium market, along with the region’s “nation-leading” economy, would serve to offset any further decreases in aggregate home prices in 2017.
Across the whole of Canada, the report said that 2016 was marked by a slew of new public policy initiatives at national, provincial and municipal levels.
Phil Soper, president and CEO of Royal LePage, said, “While efforts to address deteriorating affordability in Ontario and BC’s largest metropolitan areas are well-intentioned, too many new taxes and regulations, by too many levels of government, introduced within such a short timeline and with perceivably little research and consultation, have caused confusion and triggered drops in consumer confidence, risking the long-term health of Canada’s housing market.
“Price appreciation disparities between regions have created a quandary for policymakers who have tried to tame overheated housing markets, while supporting slower ones. What our leaders have been slow to address, and what is at the heart of the matter, is the supply side of the equation in the country’s hottest markets. Housing shortages have put immense upward pressure on prices.”