A new property transfer tax on foreign buyers in Greater Vancouver may have slowed home sales activity, but prices continued to skyrocket 30.6 per cent in the third quarter in one "final hurrah," a new survey released Thursday said.
Greater Vancouver home prices surged to about $1.19 million in the three-month period that ended Sept. 30, up from $914,705 in the same period last year, according to data from Royal LePage’s House Price Survey. In the affluent suburb of West Vancouver, house prices sizzled even more -- up nearly 40 per cent to more than $3.4 million.
But Royal LePage's president and CEO, Phil Soper, said he expects that the appreciation of Vancouver home prices will slow in the coming months.
“In what may be a final hurrah for this expansionary cycle, Greater Vancouver posted another quarter of unsustainable high price appreciation,” said Phil Soper, president and CEO of Royal LePage.
“That said, relief appears to be on the way. For months, the number of homes trading hands has been slowing on eroding affordability. And slower sales volumes lead to moderating prices.”
Sales activity in Vancouver slumped 33 per cent in September, compared with the same period last year, amid uncertainty over British Columbia’s new 15-per-cent tax on foreign buyers, according to data released earlier this month by the Real Estate Board of Greater Vancouver.
IMPACT OF NEW HOUSING RULES
In addition to the new property transfer tax that took effect on Aug. 2, Vancouver is also considering introducing a tax on owners of unoccupied homes.
"One of the things that is disappointing is to see politicians taking credit for a change in a market that was well on its way to correcting, based on affordability," Soper said in an interview with BNN. "You introduce a tax that is targeted at a very small group of home purchasers, and you say my public policy changed the value of trillions of dollars in assets -- and that’s just not true. The market had been slowing for six months now."
The measures in Canada’s most-scrutinized housing market have some fearing that foreign buyers will seek to invest in the Toronto market, but Soper said the concerns are largely unwarranted.
While Ontario considers following a similar move to B.C., home prices in the Greater Toronto Area climbed 13.6 per cent to $693,154 in the third quarter, up from an average price of $610,308, according to Royal LePage.
“Vancouver continues to attract foreign interest, and we do not expect to see an automatic migration of capital to Toronto in the wake of the new tax imposed in Metro Vancouver,” Soper said.
Royal LePage said its national house price composite -- which is based on 53 of the country's largest real estate markets -- showed that the average price of a home rose 12 per cent year-over-year to $545,414 in the third quarter.
Soper said that Canadians’ “consumer confidence suffered a direct hit” after Finance Minister Bill Morneau announced a basket of new housing measures last week, including an expansion of mortgage stress tests and closing a tax loophole for non-residents on capital gains exemptions.
But the uncertainty stemming from Ottawa's new housing rules won't keep Canadians from participating in the housing market, Soper told BNN.
"For most people in the country who aren’t pushing the limits of their family’s finances on every single purchase, the adjustment isn’t catastrophic. In other words, they’re not being taken out of the market," he said.