Despite Vancouver’s million-dollar-plus home sales dropping by 34 per cent in 2016’s second half compared with the same period in 2015, this “top tier” market sales volume fell by just 1.1 per cent across the whole of 2016, according to Sotheby’s International Realty Canada.
In its 2016 Year End Top-Tier Report, the luxury brokerage also said that despite the new foreign buyer tax introduced in August, record-breaking sales and prices in the first half of the year meant that the $4 million-plus property market saw a full-year sales increase of 36 per cent, compared with 2015.
Sales of Vancouver single-family homes in the top-tier market – defined as homes over $1 million –decreased the most in the second half of the year, resulting in an overall year-over-year decline of 16%. There were 2,895 detached homes over $1 million sold in 2016, compared with 3,454 homes sold in 2015. However, annual sales in the $4 million-plus price range were up 34% year-over-year.
The Sotheby’s report said of Vancouver’s single-family market, “While the introduction of new policy measures dulled market momentum as uncertain homebuyers and investors took a ‘wait and see’ approach to the market, pent-up buyer fatigue with the heated market was also a significant factor in the slowdown of sales activity.”
The report said that sales of $1m-plus Vancouver attached homes – such as townhouses, row homes and duplexes – increased 38 per cent year over year to 612 units, “in light of demand from buyers facing challenges in accessing the single family home market.”
It added, “The first half of the year started strong with 407 property sales over $1 million, with transactions decreasing a slight six per cent year over year to 205 properties sold in the second half of 2016.
“In spite of a moderating market, a severe shortfall of supply relative to consumer demand resulted in rapid sales velocity for top-tier attached homes to the end of the year: $1 million-plus attached home properties spent an average of 20 days on the market in the last half of 2016, the shortest sales cycle of all housing types in Vancouver.
Nearly 60 per cent of attached homes sold over $1 million were purchased at over asking price in the first half of the year, while 30 per cent were purchased over asking in the second half.
“The introduction of new taxation and lending policies had less pronounced effects on the top-tier condominium market compared to the market for single family homes,” said the Sotheby’s report.
Although there was a “mild slowdown” following the introduction of the foreign buyer tax, Vancouver condo sales of more than $1 million increased 48 per cent year over year to 1,008 sales in 2016, compared with 679 sales in 2015. Condo sales of $1-2 million, $2-4 million and $4 million-plus increased by 50 per cent, 40 per cent and 53 per cent respectively.
Sotheby’s was bullish in its forecast for Vancouver’s 2017 market, adding that in spite of the current market adjustments, “Vancouver has boasted Canada’s fastest growing metropolitan area economy for two straight years, and economists expect the city to maintain this leading position into 2017 with a 2.8 per cent expansion of the economy. A projected 3.9 per cent increase in employment would lead to the strongest gains since 1994… Despite growing concerns of a real estate bubble, the $1 million-plus real estate market in Vancouver is expected to maintain stability into the first quarter of 2017, even as it returns to more normalized levels.”