Vancouver's overheated real estate market shows no signs of cooling despite the 15% foreign buyers tax introduced by the provincial government of British Columbia in early August.
In the third quarter of 2016, home prices in the Greater Vancouver area soared 30.6%, the largest appreciation throughout the country, according to the Royal LePage House Price Survey released Thursday.
Median home prices in West Vancouver, one of the wealthiest neighborhoods in the Vancouver metro area, reached C$3.41 million (US$2.6 million), up from C$2.44 million (US$1.9 million) in the same period last year.
"That represents a nearly 40%–– or an astonishing million-dollar appreciation–– year-over-year," said Phil Soper, president and chief executive officer of Royal LePage, the country’s leading real estate firm.
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Overall, Canada’s residential prices posted a 12% increase in the third quarter, averaging C$545,414 (US$415,291) from C$486,849 (US$370,698) in the same period of 2015, according to Royal LePage, which tracks proprietary property data in 53 of the nation’s largest real estate markets.
While Ontario considers implementing a similar tax, home-price increases in the Greater Toronto Area also remained strong, increasing 13.6% over the same period.
| Prices of Two-Storeys Homes in Greater Vancouver | |||
| Area | Q3/2016 | Q3/2015 | Y-o-Y Change |
| North Vancouver | C$1.64 million | C$1.28 million | +29% |
| Richmond | C$1.46 million | C$1.04 million | +40% |
| Vancouver | C$2.62 million | C$1.88 million | +39% |
| West Vancouver | C$3.91 million | C$2.74 million | +42% |
| Source: Royal LePage |
On Oct. 3, Canada’s Finance Minister Bill Morneau announced new measures specifically designed to cool the country’s housing market and curtail foreign buying activity.
Vancouver, where properties are in great demand from foreign buyers, is faced with the highest risk of a housing bubble among the global financial centers, according to UBS’s 2016 Global Real Estate Bubble Index released in September, which notes that home prices have increased by more than 25% since the end of 2014.
However, new government taxation and regulations have introduced a great deal of uncertainty into the market, as purchasers have begun to take a wait-and-see approach, putting downward pressure on sales activity.
"While this did not significantly impact year-over-year home prices during the third quarter, it could very well result in a more balanced market moving forward," Mr. Soper said.
Write to Fang Block at fang.block@dowjones.com