Government cooling measures to temper Vancouver’s blazing real estate market appear to be working.
Sales of C$1 million-plus (US$802,900-plus) homes have declined 22.5% in Vancouver year-over-year to July 2017, according to a RE/MAX report on Wednesday.
For homes over C$3 million (US$2.4 million), the number of sales from January to July dropped 40% compared to the same period last year.
“The foreign buyer tax introduced last year—combined with a good selection of luxury single-family detached homes—reduced buyers’ sense of urgency in this segment of Vancouver’s market,” said Elton Ash, regional executive vice president of RE/MAX Western Canada, in the report.
The province of British Columbia imposed a 15% property transfer tax in August 2016 to reduce foreign investment in Vancouver’s feverish housing market and boost sales to local buyers. The tax applies to all sales in greater Vancouver where the buyer isn’t a Canadian citizen or resident.
At the same time, a strong mix of demand from downsizing baby boomers, foreign buyers and affluent younger couples led to an 11% year-over-year increase in C$1 million-or-above condo sales in Vancouver, according to the RE/MAX report.
“Conversely, supply was unable to keep pace with demand in the city’s luxury condo market and sales continue to rise year-over-year. As a result we are seeing more developers turn their attention to condo projects and are anticipating more luxury units to enter the market in the coming years,” Mr. Ash said in the report.
Overall demand for C$1 million-plus (US$801,000-plus) properties in the Greater Toronto Area (GTA) slowed during the first seven months of 2017, decreasing by 25% year-over-year, the sales report by RE/MAX said.
According to the report, the main factor driving the decrease of sales in the Greater Toronto Area was the introduction of the Ontario government’s Fair Housing Plan, which includes a 15% foreign buyers’ tax.
“Many buyers across the GTA moved to the sideline and are taking a wait-and-see approach to get a better sense of where the market is headed in the long-term following the introduction of the Fair Housing Plan,” said Christopher Alexander, Regional Director, RE/MAX INTEGRA Ontario-Atlantic Canada Region.
According to another report Wednesday by real estate portal Point2Homes, 76% of Vancouver’s active listings are at least C$1million, the most in Canada, while 11% of them are priced over C$5 million (US$4.02 million).
Besides Vancouver, eight other Canadian cities have more than 50% of their active listings inventory comprised of million-dollar homes. Surprisingly, Toronto is not one of them.
With C$1-million plus homes comprising less than a third of the overall 6,232 available listings, Toronto doesn’t even make it into the top 10, taking only the 13th spot in the nationwide comparison, according to the report by Point2 Homes.
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