The steep increases in Greater Vancouver home prices seen in the third quarter of this year could be “the final hurrah for this expansionary cycle,” according to Royal LePage president and CEO Phil Soper.
Quoted in the quarterly Royal LePage House Price Survey, Soper added, “Our widely followed house price composite showed that the median value of homes in the tiny West Vancouver suburb increased by nearly 40 per cent – or an astonishing million dollars – year-over-year.
“That said, relief appears to be on the way. For months, the number of homes trading hands has been slowing on eroding affordability. And, slower sales volumes lead to moderating prices.”
The report also examined the effect of the BC government’s new tax on foreign buyers of Metro Vancouver real estate. It said, “The Government of British Columbia’s new 15 per cent property transfer surtax on foreign nationals and foreign-controlled corporations, introduced early in the quarter, has contributed to slower sales activity but has had little impact to-date on Greater Vancouver home prices.”
Royal LePage criticized the proposed introduction of the new vacancy tax in Vancouver, suggesting that it would be unfair to add another levy onto owners of such homes when they already pay property tax.
The report said, “This second tax would be especially punitive, given that property taxes pay for services those homeowners do not use, such as schools, public transit and waste removal services.”
However, the brokerage observed that demand for Vancouver housing would remain high even "in the face of regulatory headwinds."
Soper said, “Vancouver continues to attract foreign interest, and we do not expect to see an automatic migration of capital to Toronto in the wake of the new tax imposed in Metro Vancouver.
"It is important to remember that most people buy houses for the location, lifestyle and family needs, and not simply upon financial investment criteria.”
Across the country, the report said that price growth remains strong, with most markets increasing prices steadily but not too quickly and even resource-dependent provinces only seeing small declines, said the report.
“Nationally, our real estate markets remain healthy, with home values showing modest to strong (yet rational) price appreciation in almost every Canadian city,” said Soper. “Even in the hardest hit oil patch regions, prices have held up well, with small single-digit declines, year-over-year.”
The report asserted that the federal government’s latest measures to cool the national housing market by tightening mortgage qualification rules will not damage the market as much as many have feared.
“Consumer confidence suffered a direct hit when the federal government introduced new, more restrictive regulations in early October,” said Soper. “While it is too early to say definitively, it appears Canadian homebuyers are adjusting quickly, and that fears of a hard correction were unwarranted. While the changes are significant, major lenders may already be using similar criteria when writing mortgages in sensitive regions like Alberta and BC, so the additional drag on the market resulting from the new legislation won’t be as great as it appears on the surface.”