Home sales in the Greater Vancouver region in the first weeks of August fell by nearly 63 per cent when compared with the same period last year, according to MLS® data obtained by Blue Glacier Realty Services on behalf of REW.ca.
In the period August 2-19, 2016, there were 984 residential properties sold, compared with 2,653 homes in the same period in 2015.
The drop came immediately after the 15 per cent increase in Property Transfer Tax for overseas buyers was introduced August 2, leading to reports of real estate deals collapsing around the region.
However, prominent Vancouver REALTOR® Keith Roy told REW.ca that a couple of factors could affect sales in this way, and that it was important such data are not taken out of context.
He pointed out that when adding in the sales figures from last week of July, which were up dramatically year-over-year despite total July sales figures dropping, sales numbers across the total period were relatively normal. The end-of-July surge could be attributed to a rush of buyers getting their deals closed ahead of the August 2 deadline for the new tax, after which there was a lull.
Roy added, “I think it’s also an emotional reaction to an unexpected policy change on the part of the buying public, who are taking a small wait-and-see approach.
“I think the market will normalize as we continue into the fall. People are still ready to buy – I’ve sold two properties for multiple offers over asking price in the past two weeks.”
However, mortgage broker and industry analyst Peter Kinch warned, “The market could be at risk of an over-correction from this kind of information. The real estate industry has a natural cycle that usually includes a summer lull, and this has combined with the new foreign buyer tax being introduced in – you guessed it – August. There will likely be a slowdown in Asian money and a sharp decline in US buyers, for whom Vancouver was previously a good-value option, but now is less so. This combined with the fact that locals are on holiday could create an exaggerated effect and make August and September sales look terrible."
Kinch added, “I fear that this will get misinterpreted by the media and the market will overreact.”