A year after the introduction of Canada’s first foreign-home buyer tax drove Metro Vancouver sales down 44 per cent, the three most popular markets for foreign buyers have yet to recover.
West Vancouver, Richmond and the Westside of Vancouver – all areas with the highest proportion of foreign buyers prior to the implementation of the 15 per cent tax on August 2, 2016 – are all seeing lower sales now than in 2016.
West Vancouver and Richmond are also the only major municipalities with house prices lower now than a year ago, and house prices have flat lined on Vancouver’s Westside, according to recent Real Estate Board of Greater Vancouver data.
Only 52 detached houses sold in West Vancouver this August, down from 72 in August of last year and benchmark house prices have fallen by 6.3 per cent, the biggest drop in the Metro region. Realtors say the price plunge is more dramatic at the high end of the market.
“There, we have seen price reductions of 20 per cent to 30 per cent,” said Brent Eilers of Remax Masters Realty in West Vancouver. According to Eilers, foreign buyers today immediately discount any asking price by 15 per cent to compensate for the tax “and then begin negotiations downward.” He points to a house on Russet Way in West Vancouver that was listed last year at $4.6 million. After price reductions, it is now listed at $3,199,000.
“The market is extremely sluggish,” Eilers said.
In Richmond, where foreign buyers accounted for 10 per cent of housing sales prior to the foreign-home buyer tax, according to provincial government studies, the August benchmark price of a detached house was down 0.9 per cent from a year earlier.
This compares with a 43 per cent price increase in the previous 12 months.
In the last year, Richmond detached sales have dropped 31 per cent to 959 houses. The benchmark price for a Richmond house in August was $1.57 million, down from $1.7 million in August 2016.
On Vancouver’s West Side, detached housing sales so far this year are down 42 per cent from the same period in 2016 and, as of August, the benchmark house price had been shaved by an average of $135,000 to $3.5 million.
Neil Hamilton, a senior property advisor with Macdonald Realty Ltd. on the West 38th Avenue, said mainland Chinese buyers had been “one of the major forces driving the Westside property market over the past few years.
“Recently the Chinese government has been diligently attempting to limit the flight of capital out of [its] country. So the higher-priced Vancouver West Side markets have been experiencing a downturn in activity as a result.”
Hamilton, however, noted that the Chinese government could loosen its restrictive policies. “I believe that this temporary downturn represents a solid buying opportunity. I can see a very strong spring ‘18 market,” he said.
Eilers is not so sure. “It is a hell of a lot better time to buy now than last year,” he said, but he suspect that prices for higher-end houses will continue to decline. “Eventually, sellers have to adjust their price.”