The Canadian Real Estate Association (CREA) says July marked the third consecutive month of fewer home sales, as the Vancouver market slowed.
The association said Monday the number of transactions fell 1.3% nationally between June and July, as more than half of all markets tracked showed declines in July – including Greater Vancouver and the nearby Fraser Valley, which slipped 6.7% and 14%, respectively.
The national sales in July were also down 2.9% compared with the same month a year ago, as Greater Vancouver fell 18.3% and the Fraser Valley lost 10.4%.
“The real eye-catcher is the fact that mighty Vancouver has been largely responsible for the recent cooling, with seasonally-adjusted sales now falling in five straight months, albeit from gaudy record levels at the turn of the year,” stated Robert Kavcic, senior economist at Toronto-based Bank of Montreal, in a note to clients.
However, despite the drop in the number of sales, the national average price for a home sold in July was $480,743, up 9.9% compared with a year ago. If Vancouver and Toronto are excluded from calculations, the average price was $365,033, up 7% compared with the same month last year.
“Where these two cities will go in the months ahead is where the story starts to get quite interesting,” Kavcic wrote. “As noted, Vancouver has already seen its market loosen up quite a bit recently, and the new tax could pile on to take some momentum out of price growth.”
A new 15% property transfer tax on foreign buyers came into force this month in Metro Vancouver. The tax was brought in by the B.C. government in hopes of helping to improve home affordability in the city where prices have skyrocketed in recent months.
Diana Petramala, economist at Toronto-based Toronto-Dominion Bank suggests the new tax on foreign buyers in Vancouver is likely to reinforce the downturn already underway.
“TD Economics’ forecast assumes residential sales fall an additional 14% to 20% due to the tax, not only as foreign buyers leave the market, but as domestic players get spooked and move to the sidelines,” Petramala says. “Overall, home prices are expected to fall by almost 10% between now and the end of next year.”
Overall, the number of newly listed homes in Canada rose by 1.2% in July compared to June, while the national sales-to-new listings ratio eased to 61.6% in July. It was the second monthly decline.
CREA says a sales-to-new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets, respectively.