The uncanny pace of home price growth in Vancouver has paved the way for a dramatic correction in the near future, according to a recent report by the National Bank
The value of detached homes in the city could experience a decline of as much as 20 per cent over a 12-month period up to late 2017, senior economist Marc Pinsonneault wrote in the report.
“Prices have accelerated sharply, especially at the beginning of 2016, and many more people were priced out of the market,” Pinsonneault stated, as quoted by The Globe and Mail
Observers have pointed at a steady decline in sales volume of detached homes, townhouses, and condos in the city, after reaching record highs in March. The second half of the year saw the introduction of a 15 per cent foreign buyers’ tax as well as tighter federal rules governing mortgages.
Among the hardest hit sectors is the luxury property market, and further slackening in the sales of this housing type will definitely pull down Vancouver’s average home price, Pinsonneault warned. Fresh figures from the Real Estate Board of Greater Vancouver backed up this claim: The average detached home price in the city sat at $1.53 million in September, down by 15.7 per cent from April.
However, an RBC Economics report released earlier this month countered these fears, saying that once the market has adjusted to the regulatory changes, Vancouver will prove to be just as enticing to wealthy Chinese investors as it was before the announcement of the new rules.
“Vancouver offers a sought-after lifestyle and prestige for wealthy Chinese that only a handful of other international cities can boast,” the RBC report stated.
And while the foreign home buyers’ tax implemented by the B.C. government on August has slowed down sales, the impact on the luxury market of all these measures would be negligible.
“High net worth individuals are drawn to Vancouver for the same reasons as foreign investors, as well as other factors such as good schools, clean environment and the ‘global passport’ that Canadian citizenship offers,” the report assured.
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