Not Good News for Luxury Property Owners

Economic Concerns with House Sale Decline

Speculation is on the rise that the B.C. Liberal Government will likely take blame for falling house prices in the next year, a report says.

The report, which was conducted by Capital Economics, states that the likelihood of the blame falling on the Liberals’ decision to impose a foreign buyer tax on the housing market is high, despite the fact that the trend in Vancouver’s housing market began to change well before the foreign buyer tax took effect. The report expects to see house price growth around, or possible below, zero percent by May of 2017. The B.C. government will likely take the brunt of the blame for this.

August 2016 is so far showing a great decline in housing purchases. In Greater Vancouver, home sales were down for the first two weeks of August by 85 percent when compared to the same two-week period of 2015. In West Vancouver specifically, home sales were down by 94 percent – a total of three home sales in the first half of August 2016. For reference, there were 52 sales in the first half of August 2015.

Much of this decline in home sales comes from the higher end of the market where the top-market homes have been taking considerably longer to sell. In the lower-range housing market, home sales continue to be sold quicker than previously. In addition, the lower average selling price that has been documented in recent months might not be an indication of the market declining as a whole; it could be an indicator only of the types and prices of home sales.

In British Columbia, real estate and construction of homes account for more than a quarter of the province’s economy. The slowdown in housing sales raises some concern for a great decline in the economy of B.C. While this comes at the same time as the new foreign tax, experts say that the downturn began well before the crackdown on foreign buyers. West Vancouver home sales, for instance, fell by 38 percent in June, whereas the new tax was not introduced until the end of July.

Do you think there will be a downturn in our economy? Will the Liberals take the blame?

Please tell us what you think!