Photo: Derek Blackadder/Flickr
As BC home sales nosedived in January following a strong December, the British Columbia Real Estate Association (BCREA) pointed the finger at new mortgage regulations as the likely culprit for the decline.
In January, BC home sales fell 10 per cent from December 2017, on a seasonally adjusted basis, according to the latest data from the BCREA, published today.
“There was some advance buying going on at the end of the year — trying to get in before the new regulations came into effect. And of course there was obviously a lag on sales in January as a result of that,” BCREA Chief Economist Cameron Muir tells BuzzBuzzNews.
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Muir says the impact was magnified by strong sales activity in December, as many buyers fast tracked their purchase decisions ahead of the new mortgage stress test, which came into effect on January 1.
Although home sales dropped compared to a month earlier, the seasonally adjusted annual rate of transactions was 101,800 units in January — a sign that demand in the market remains “quite buoyant,” says Muir.
There were 5,306 home sales province-wide in January, an 18.3 per cent year-over-year increase.
In Greater Vancouver, a total of 1,846 units changed hands in January, up roughly 19 per cent from 1,553 units a year ago.
All other BC markets saw an annual gain in sales last month, except for Victoria where 407 units sold in January, a 9 per cent decline from the 449 units sold a year ago.
“One of the challenges in Victoria is they have an incredibly low level of listings. So, the number of homes for sale are at or near decade lows and that’s going to operate the slow overall home sale activity,” says Muir.
Last month, Victoria’s sales-to-active listings ratio declined to 40.5 per cent from 46.3 per cent in January 2017 — the only BC market to experience a decline. However, Muir says the market remains in strong sellers territory.
In January, the province’s total active listings dropped 8.6 per cent to 20,901 units, compared to 22,874 units a year earlier.
With demand outweighing supply across the province, all markets experienced price growth last month.
Overall, the average price of a home in the province was $721,477 in January, up 16 per cent from $621,093 the previous year.
Going forward, Muir says market headwinds will continue to impact housing activity across the province this year.
“Part of those [headwinds] are new mortgage regulations, a rising interest rate environment, and perhaps, more importantly, price levels in many markets are quite elevated and there’s not a lot of room to grow on the upside on prices.”