Vancouver home prices to fall as much as 20 per cent: bank
Date：2016/10/24
October 21, 2016 9:44 pm
By Jill SlatteryOnline Producer Global News
〔Global News〕Canada’s National Bank is predicting home prices in Vancouver will fall as much as 20 per cent in the next year.
In a report issued Friday, the financial institution reported Vancouver’s curious housing market will see an “imminent pullback” as the number of home sales continue to fall.
Beginning in March 2016, sales began dropping after a long period of sustained growth. But it wasn’t until July that many observers started noticing the slowdown, in part due to a less intense benchmark price growth.
It was also the month when the B.C. government introduced a 15-per-cent foreign-buyers tax aimed at limiting the number of offshore buyers, who many had blamed for rapidly escalating prices.
After the tax came into effect on Aug. 2, the Vancouver market hit a literal standstill as sales dropped and prices froze. The trend continued for the most part in September.
National Bank says there were several factors leading up to the March peak that contributed to the downturn.
For instance, the minimum down payment for insured mortgages was raised to 10 per cent from five per cent for homes priced over $500,000. Also, the B.C. government introduced a three-per-cent tax on homes sold for over $2 million.
The bank also cites China’s anti-corruption campaign for slowing the flow of capital out of that country.
But that didn’t stop prices from rising at an unprecedented rate. The Teranet-National Bank House Price Index showed an average monthly increase of 2.5 per cent from February through to August.
Now, with October almost at a close, the bank believes prices may finally start to catch up to all the other indicators of a collapsing market.
It is expecting the Teranet-National Bank index to show a decline of 10 per cent over the next 12 months, with detached home prices dropping 20 per cent, townhomes dropping nine per cent and condos falling five per cent.
That would send a $2 million house back down to the $1.5 million price point and a $1 million house would be about $730,000.
The report comes a week after real estate firm Royal LePage said Vancouver real estate had experienced its “final hurrah.”