Vancouver realtors blame mortgage stress test for sluggish April sales
A condo building is seen under construction surrounded by houses in Vancouver, B.C., on March 30, 2018. ( THE CANADIAN PRESS/Darryl Dyck)
April was another sluggish month for home sales in Metro Vancouver, and realtors are once again blaming government policies for the slumping numbers.
The Real Estate Board of Greater Vancouver said there were 1,829 sales last month, which is a whopping 43 per cent below the 10-year sales average for April.
Board president Ashley Smith said measures intended to protect the market are serving to "hinder home sales activity."
"The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing," Smith said in a statement.
“Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand.”
The stress test forced potential homebuyers to prove they'd be able to keep making payments if interest rates were to rise, and was designed to avoid a Canadian housing bubble.
The country saw a massive drop in new mortgages last year, and a recent report from CIBC blamed about $15 billion of the decline on the stress test.
But not everyone is concerned. In Metro Vancouver, prices are dropping and inventory is increasing, a result many potential home-buyers were waiting years to see.
According to the REBGV, there are currently 14,357 homes listed for sale across the region, a 46 per cent increase over April 2018 and a 12 per cent increase over March 2019.
“There are more homes for sale in our market today than we’ve seen since October 2014. This trend is more about reduced demand than increased supply,” Smith said. “The number of new listings coming on the market each month are consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.”
The benchmark price for all types of homes in Metro Vancouver fell to just over $1 million in April, which is an 8.5 per cent drop from the same month last year.
With files from The Canadian Press