Eagerly-awaited numbers released from the Real Estate Board of Greater Vancouver show how badly home sales tanked in the region after the introduction of a B.C. foreign buyer tax at the end of July.
Home sales fell in the region by 26 per cent in August compared to the same month last year, according to figures released Friday from the REBGV.
REBGV President Dan Morrison said that the break-neck pace of sales seen in the early months of 2016 have been replaced by "more historically normal" activity this summer.
"Sales have been trending downward in Metro Vancouver for a few months," he said in a statement. "The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers.”
Morrison said several more months of data are needed before the board can truly understand the impact of the new tax. It's still a seller's market when it comes to the ratio of sales versus listings, he added.
The tax forces, which foreign nationals to fork over an additional 15 per cent of the home's value in property transfer taxes, has done little to cool prices, however. The MLS benchmark for all residential properties in the region is now sitting at $933,100 – a 31.4 per cent increase compared to April 2015, and a 4.9 per cent increase in the past three months.
Morrison said there have been fewer detached home sales in the highest price points compared to all residential sales, which is causing average sale prices to show a decline in recent months.
There were only 715 detached properties sold in August, a decrease of 44.6 per cent from the 1,290 recorded in August 2015.
Figures obtained by CTV News showed that sales dipped as much as 84 per cent in some areas in the period between August 1 to 15. The biggest declines happened in areas where there has historically been a higher percentage of foreign buyers, including Richmond.
Property owners, realtors and investors have been watching Vancouver's real estate market with keen interest to gauge what effect the new 15 per cent tax would have.
Vancouver realtor Paul Eviston doubts the foreign buyer tax is entirely to blame for the lower sales numbers.
Eviston said the market was showing "clear signs" of cooling in terms of sales volume in June and May, and sellers have adjusted their expectations.
"They're realized we're not in the same market we were in the spring," he said. "I think a lot of sellers have adjusted their expectations and selling prices to reflect what's happening."
He believes there was a "knee-jerk reaction" after the tax introduction, but that in the long-term foreign buyers will accept the extra cost is "the cost of doing business in Vancouver."
With a Vancouver market mired in uncertainty, the longtime realtor says this "is probably one of the best buying opportunities we've seen in the last 10 years."
"For all the people that were complaining about affordability issues in Vancouver, take a hard look around to see what homes are listed at and remember this: The market won't stay like this," he said.
Observers say although the tax may have thrown the local market into uncertainty, it's likely that sales will rebound over time.
A senior economist with RBC said strong ties with China and a robust job market will translate to continued offshore interest in the Vancouver market.
"I would not think that this is the end of that decades-long love affair. It might be a bit of a temporary break," Robert Hogue told The Canadian Press.
