As analysts predict further double-digit price increases this year and government scramble to put a lid on runaway housing costs, cracks are starting to appear in Vancouver’s residential market.
Royal LePage is forecasting Vancouver home prices will soar 27 per cent by the end of 2016 after posting a similar increase in the past 12 months, driving the price of a typical bungalow to $1.3 million.
The provincial government has cracked down on real estate flipping, added a sales tax on homes priced above $2 million and recently backed a City of Vancouver tax on vacant homes.
The federal government has doubled the down payment needed on the portion of homes priced over $500,000 and warned lenders to verify borrowers’ income levels, especially when foreign money is involved.
The federal Finance Department has vowed to conduct a “deep dive” into the Vancouver housing market, with its findings expected to surface this September.
But Metro Vancouver’s housing market may already be correcting itself.
On Vancouver’s west side, which has seen a 36 per cent price increase since mid-2015, sales of detached houses have fallen for four months straight and were down a startling 41 per cent in June from the same month a year earlier. There are also tentative signals that prices are stalling. Benchmark house prices in June had increased less than 1.5 per cent from a month earlier in some key Vancouver markets, including Kitsilano and Point Grey.
Detached housing sales in east Vancouver plunged 47 per cent in June, compared to June 2015, and condominium sales were down 21 per cent.
“It is price fatigue,” said Vancouver real estate consultant Ozzie Jurock, suggesting that Vancouver is simply running out of people who can afford to buy.
The fatigue may be settling into other high-priced markets. Sales of detached houses in North Vancouver were down more than 10 per cent in the first half of this year, compared to the same period in 2015 as prices jumped to $1.6 million. In Richmond, where the typical house sells for $1.7 million, detached home sales are down 41 per cent compared to the first six months of 2015. June prices were actually slightly lower from a month earlier in five Richmond neighbourhoods, according to data from the Real Estate Board of Greater Vancouver. But the modest slowdown does not deter some analysts.
“We don’t see even a mild correction for the pistol-hot Vancouver market in 2016,” said Phil Soper, president and CEO of Royal LePage.
