Report says government policies weigh on declining B.C. housing market

Despite B.C.’s strong economy, real estate transactions will decline 11 per cent in 2019

A real estate market outlook by Vancouver’s Central 1 Credit Union says tougher federal and provincial government housing policies are behind a drop in demand for resale housing in British Columbia.

The report released on Tuesday says Vancouver is the epicentre of a real estate downturn where home sales dropped 40 per cent since the end of last year as stricter policies deter potential buyers while sellers wait on the sidelines for a rebound.

READ MORE: B.C. real estate board urges feds to revisit mortgage stress test

The federal government’s mortgage stress test, requiring buyers to prove they can withstand future interest rate hikes, cut purchasing power by 20 per cent, while the B.C. government’s 20 per cent foreign buyers tax sent international buyers out of the province, the report says.

Report author, Central 1 deputy chief economist Bryan Yu, said that despite B.C.’s strong economy, real estate transactions will decline 11 per cent in 2019 and home values will drop four per cent before a mild market rebound.

“We’re probably hitting a bottom,” said Yu in a telephone interview. “We will probably be heading up at some point in 2019. It’s not going to get much worse than this.”

Finance Minister Carole James said the B.C. government’s measures to moderate the market, including the speculation and vacancy tax on vacant properties, will take time to increase the availability of rental properties and reduce property speculation.

“I’m seeing cautiously optimistic signs, a little bit of an increase in the vacancy rate, a little bit of softening of prices, but I think we’ve got a long way to go.”

A recent government-commissioned report said money laundering caused home prices across the province to increase by five per cent in 2018.

READ MORE: Mortgage test, high supply to keep cooling B.C. housing prices in 2019, report says

READ MORE: Real estate board calls on Ottawa to revisit mortgage stress test

James has said money laundering could have distorted Metro Vancouver’s market by as much as 20 per cent.

“When you think of a family who can’t afford to buy a home, money laundering impacts everyone and we have to address it,” she said in an interview on Tuesday.

Yu said his report did not examine the possible impact of money laundering on B.C.’s real estate market. He said the money laundering report and its conclusions were based on international data and projections from those numbers.

“These were model-driven numbers based on international numbers and I would say very little localized information,” said Yu. “It seems to me we’re really still searching for those numbers and trying to get a better grasp of them.”

Dirk Meissner , The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

BC SPCA seeks help for German shepherd puppies abandoned near Port Alberni

Donations have ‘petered out’ as doors are closed due to COVID-19

Funtastic music festival and slo-pitch cancelled for 2020

Annual Canada Day event cancelled due to COVID-19

Port Alberni family thanks long-term care workers with face shield donation

Matriarch received ‘excellent care’ at seniors’ facility before her death in 2018

PAC RIM ACTIVE: Time for a nature club in Port Alberni

Nature clubs provide education, spearhead conservation projects in their communities

Timeline pushed back for Tofino-Ucluelet highway construction project

Ucluelet mayor Mayco Noel said the ministry’s announcement came as “no surprise.”

COVID-19 death toll reaches 50 in B.C., while daily case count steadies

B.C. records 34 new cases in the province, bringing total active confirmed cases to 462

An ongoing updated list of Alberni Valley events affected by COVID-19

Has your event been cancelled or postponed? Check here

B.C. unveils $5M for mental health supports during the COVID-19 pandemic

Will include virtual clinics and resources for British Columbians, including front-line workers

VIDEO: Community rallies around Campbell River fire victims

Emergency Social Services volunteers logged over 100 hours in first day after fire

B.C.’s COVID-19 rent supplement starts taking applications

$300 to $500 to landlords for April, May and June if eligible

Reality TV show about bodybuilders still filming in Okanagan, amid COVID-19

Five bodybuilders from across the country flew to Kelowna to move into a house for a reality TV show

B.C.’s top doctor details prescription for safe long weekend

Yes, it includes hosting an online cooking show

Most Read