Activity in the Greater Vancouver housing market may rebound in the coming weeks, following a first quarter lull that saw buyers and sellers reluctant to make concrete moves in an uncertain market.
According to Royal LePage’s House Price Survey on the first quarter of 2017 released today, a price reset is happening in BC’s Lower Mainland as the region grapples with its housing affordability crisis along with the implementation of recent government policies, including the Metro Vancouver foreign-buyer tax that came into effect last August.
But despite the slowdown, which Royal LePage says is in response to the foreign-buyer tax, Vancouver housing may reverse course with homebuyers rushing back into the market.
“For the first time in several years, real estate markets in Vancouver and Toronto are headed in opposite directions,” says Phil Soper, Royal LePage President and CEO. “The Vancouver market stalled, as confused consumers took to the sidelines after a series of uncoordinated moves by all three levels of government,” he adds.
In the first quarter of 2017, the aggregate price of a home in Greater Vancouver was $1,179,482, a 12.3 per cent year-over-year increase.
Greater Vancouver’s average home price last quarter is substantially lower compared to the 25.6 per cent year-over-year increase seen in 2016’s fourth quarter.
This is the first time since 2013 that the region’s home values as a whole declined on a quarterly basis.
Meanwhile, during the same period the Greater Toronto Area has taken over as the nation’s hottest market with its home price appreciation rising an unprecedented 20 per cent compared to the first quarter of 2016.
Instead of mitigating foreign purchases, Royal LePage argues the foreign-buyer tax deterred Canadian buyers and sellers the most, but heading into the next quarter, they may be more optimistic about participating in the market.
“The reality is that as much as 90 per cent of the housing activity that disappeared overnight in the Lower Mainland after the tax was introduced was from Canadian residents, not foreign investors,” says Soper. “Homebuyers are waking up to this reality and may be ready to rush back into the market,” he adds.
With increasing demand, Soper warns “market whiplash” could occur in the coming weeks, causing prices to soar again.
In 2017’s first quarter, the City of Vancouver also saw a slower rate of year-over-year home price appreciation compared to 2016’s fourth quarter, with a 10.1 per cent year-over-year increase to an aggregate price of $1,412,527.
Elsewhere in the Lower Mainland, the regions of Langley, North Vancouver, Surrey and Richmond all saw price increases well over 10 per cent year-over-year, with Langley seeing the largest jump at 21.2 per cent. North Vancouver and Richmond both recorded average sale prices of over $1 million in the quarter.
“Vancouver house prices are up compared to the first quarter of 2016, yet this doesn’t tell the complete story,” says Soper. “For weeks now, we have witnessed a steady fall in real estate values in the Lower Mainland, with sales activity down some 40 per cent compared to recent norms,” he continues.
Although BC’s housing market is not reaching levels recorded last year, Royal LePage anticipates the province will continue to be an economic growth leader in the country.