Stricter government policies on housing have proved to be a potent factor pulling down resale demand in BC, according to Vancouver’s Central 1 Credit Union.
A combination of B-20, which cut off purchasing power by 20%, and the BC government’s 20% foreign buyers’ tax pushed capital holders to less hostile markets elsewhere in Canada.
The firm’s analysis found that home sales in the province dramatically fell by 40% since the end of 2018. Currently, the market is characterized by hopeful buyers discouraged by costs, and potential sellers waiting on the margins for a market recovery.
Even a robust provincial economy will not be enough to turn things around. Residential property transactions are estimated to further decrease by 11% this year, Central 1 deputy chief economist Bryan Yu said.
A mild rebound might follow soon after, offering a glimmer of hope for the struggling market.
“We’re probably hitting a bottom,” Yu told The Canadian Press. “We will probably be heading up at some point in 2019. It's not going to get much worse than this.”
Yu noted, however, that the report did not look at the possible effects of money laundering. Finance Minister Carole James previously said that dirty money could have “distorted” the Metro Vancouver housing market by around 20%.
“These were model-driven numbers based on international numbers and I would say very little localized information,” Yu said. “It seems to me we’re really still searching for those numbers and trying to get a better grasp of them.”
The results of a recently released government report indicated that money laundering pushed BC’s home prices up by approximately 5% last year.