The national housing market showed promise in April, as year-over-year sales rose 3.6%, according to Canadian Real Estate Association statistics, but Vancouver displayed more signs of a market in duress.
“The big thing for British Columbia, and Vancouver in particular, is the artificial intervention, I’ll call it,” Elton Ash, REMAX’s regional executive vice president. “But the greatest effect is the B-20 strict mortgage qualification criteria, which is affecting a lot of markets nationally, but having a large impact on Vancouver specifically.”
Prices rose in the Okanagan Valley by 1%, 0.7% in Victoria, and other parts of Vancouver Island saw considerable gains of 6.2%. However, prices in the Greater Vancouver Area were down in 8.5% in April 2018 from the previous year, and down 4.6% in the Fraser Valley.
“B-20 is having a major effect in Vancouver but so are the 20% foreign buyer tax, which was increased from 15%, the so-called speculation tax that was brought in for second homes that sit vacant for a period of time. If you live outside of the province, you’re taxed on them. Then you have the City of Vancouver’s 2% vacancy tax, and when you add in a mortgage and the provincial tax regime that has come in to bring affordability to the marketplace, it’s actually had a really negative effect on the marketplace.”
The Greater Toronto Area markets had positive sales in April, up 4.2% year-over-year last month, however, it was still a seven-year low.
“It’s a mixture of new development coming on the market and resales being up, being that it’s the spring season,” said Ash. “It’s the busiest time of the year for real estate sales, so there’s a natural tendency to see higher inventory for resale, but the greatest effect is the new developments coming online.
“However, single-family detached is still difficult inventory to find in the City of Toronto itself, and that won’t change in the future. It’s an indication of the marketplace and the city being very popular.”
Prices in Montreal increased 6.34% in the month of April, compared to the same time in 2017, as the city’s real estate market remains on fire. It is likely impelled by the foreign buyer taxes in Toronto and Vancouver, although Montreal’s real estate market saw much activity even before that.