In an October 6 report, the Canadian federal housing agency put a question mark to the long-running notion of foreign capital as the main cause of Vancouver’s elevated prices, noting that the influx of overseas money is just one of the many drivers of growth.
“Although the extent to which wealthy foreign buyers/capital have impacted home prices is still unclear and contested, this is widely believed to be one factor,” Canada Mortgage and Housing Corp. market analyst Robyn Adamache wrote in the report, as quoted by The Globe and Mail
“Equally important are housing and land supply constraints, as well as the economic and demographic fundamentals that drive housing demand,” Adamache stated.
The analyst added that low interest rates, healthy population growth, and the extent of the Agricultural Land Reserve are other contributing factors to Vancouver’s prices, which have seen slight drops in the months following the implementation of a 15 per cent property transfer tax on foreign buyers of B.C. homes.
Data from the MLS indicated that the average price of detached properties sold in Greater Vancouver has plunged by 16.1 per cent from January 16, down to $1.53 million in September.
“Sales and prices had already started to dip before the introduction of the foreign buyers tax, so it basically underlined existing trends in the resale market,” Adamache said.
The Real Estate Board of Greater Vancouver recently announced that the tax essentially drove off a significant proportion of wealthy overseas home buyers from Canada’s most expensive city, citing data that showed a dramatic 33 per cent year-over-year decline in sales volume last month.
“There’s no doubt — the number of transactions has gone down and homes are on the market longer,” Board president Dan Morrison said. “The tax spooked everybody, and even locals are now holding back and watching.”
The fresh data also indicated that condo and townhouse sales have seen decreases, although not to the degree seen among detached houses.
Vancouver tax spooking potential buyers
Vancouver home sales plunge nearly 33% last month, real estate board says