Vancouver Home Sales Lowest in Nearly Two Years as Tax Bites

  • Transactions fell 26% to 2,489 in August from year earlier
  • Average prices for detached properties dropped 17% from July

Vancouver home sales fell 26 percent in August from a year earlier and prices slid as the government’s moves to cool the market by taxing foreign buyers crimped demand.

Sales also dropped from July, down 23 percent to 2,489 transactions, according to a statement from the Real Estate Board of Greater Vancouver. The average price of a detached property declined 17 percent on the month, and 0.6 percent on the year, to C$1.47 million ($1.13 million) in August, the lowest price since September 2015.

The British Columbia government’s new 15 percent tax on foreign homebuyers, designed to help cool the Vancouver market after average prices in that city doubled over the past decade, took effect Aug. 2.

Detached properties were hit hardest as sales dropped 45 percent from a year earlier. Transactions of attached homes such as town-houses dipped 25 percent and apartment sales were down 10 percent.

Friday’s data show the tax “appears to have added” to a slowing trend that started several months ago by “reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers," Dan Morrison, president of the real estate board, said in the press release.

Erik Hertzberg/Bloomberg

There’s an “imbalance between supply and demand in most communities," Morrison said. His group opposed the tax after it was announced as it also applied to pending transactions, leaving many buyers shouldering an unexpected tax and sellers with scuttled deals. He said in the statement the board is seeing fewer detached home sales, particularly in the highest price points.

As sales slow and prices cool, new listings of properties increased only slightly from last year, rising 0.3 percent.

“What we’ve seen in August is mostly buyers going on the sidelines, either being forced onto the sidelines because they were cut by the sales tax and decided not to proceed with sales, or folks out there saying ‘let’s see how the dust settles,’” Robert Hogue, senior economist at Royal Bank of Canada, said by phone. “So far we haven’t seen necessarily a flood of properties being listed on the market.”

As the Pacific-coast city cools, governments of all levels are deriving the biggest share of their revenue from housing and related activities -- about 17 percent -- in about two decades, according to a National Bank of Canada report this month.

The city is still the least affordable in the country. About 90 percent of a typical family’s income is now going to service a mortgage and pay property taxes and utility bills in Vancouver, double the national average, according to a Royal Bank of Canada second-quarter report.

The benchmark price of all housing types, a custom measure used by the real estate board which excludes some properties, showed the price of a home on that measure increased 31 percent from a year earlier in August to C$933,100.

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