B.S. Government measures aimed at cooling the housing market in the Vancouver region will fully enter into force in 2019, which will set the stage for continued sluggish sales.
Numerous provincial policies, combined with a federal stress test that complicates work with borrowers, have already had a serious psychological impact on the Vancouver area, said Brian Yu, deputy chief economist at Central 1 Credit Union. Canada's banking regulator conducted a stress test on January 1, 2018 to make it harder for buyers to apply for a mortgage.
Sales in the Vancouver region declined by about 23 percent in 2018 compared with 2017. It is expected that the trend towards completely different expectations between buyers and sellers will continue in 2019, said Mr. Yu, who predicts that regional sales may fall by 0.8 percent in 2019 compared to 2018.
"We will see a constant gap between what sellers are willing to sell, and the fact that buyers can and want to bet on real estate," he said in an interview. “It is very dependent on low sales.”
The provincial government of the PDP will begin collecting the so-called tax on speculation in 2019. The annual tax is intended mainly for residents outside the province who own real estate in the urban markets of British Columbia. These assets, as a rule, are secondary homes or recreational facilities that are not rented.
B.S. The government will also begin to impose an annual income tax on homeowners, whose value is estimated at more than $ 3 million. The speculative tax and the new income tax are part of a broad package of housing policy, originally promulgated in the budget of BC NDP in February 2018.
Although the affordability crisis persists, average prices for individual homes, apartments, and townhouses in the Vancouver region may drop by 3 percent in 2019 compared to 2018, Yu predicts. He adds that the trend of sluggish sales and fixed or slightly lower prices may continue in 2020 and 2021.
In August 2016, the previous British liberal government imposed a 15 percent tax on foreign buyers in the Vancouver area, which contributed to the decline in the detached housing segment in the second half of 2016 and in early 2017. After a turbulent housing recovery On the market in 2017, the BC PDD government raised the tax on foreign buyers to 20 percent in February 2018, and also expanded the tax on other city markets in the province.
For most of 2018, the real estate market of the Vancouver region was under "strong pressure", which was aggravated by the growth in mortgage rates, said Sal Guatieri, senior economist at Bank of Montreal.
“The demand is so weak that few buyers can now get some price concessions from sellers,” write economists at the Royal Bank of Canada Craig Wright and Robert Hog.
However, according to Yu, British Columbia’s economy is forecast to remain strong over the next three years, while unemployment should remain relatively low and there are no signs indicating an impending global financial shock.
“Housing prices are falling, but they will not fall,” he said. “We have fallen into a very weak place in the housing sector, and this is indeed a political event. The labor market is strong. We are not in a recession or crisis of confidence. ”
The average price of individual homes sold on the west side of Vancouver reached $ 321,8333 in November 2017. The average price of individual houses has since fallen by 11 percent, but for most potential buyers it is still unavailable and amounts to 2.860 thousand dollars.
The market for condominiums and townhouses showed signs of resilience in early 2018, although in recent months it has softened noticeably. The average cost of apartments sold in Greater Vancouver in November was $ 690,190, which is 7.7% less than in April.
But even entry-level apartments remain too expensive for many novice buyers, says Paul Kershaw, founder of Generation Squeeze, a lobbying group set up to represent the views of Canadians aged 40 and younger. “The prospect of home ownership for a younger demographic group suffered in British Columbia more than in any other province,” he said.
The rapid rise in property prices from mid-2013 to mid-2016 in the city of Vancouver prompted many residents to move to other parts of the province, which contributed to higher prices in markets such as Victoria and Sunshine Coast, Mr. Kershaw said.
An analysis conducted by the Squeeze generation showed that British Columbia’s tenure rate for residents aged 35 to 44 was 67 percent in 2016, compared with 78 percent in 1977.
“We did have an earthquake in the BS real estate sector,” said Mr. Kershaw. “This is not just a Vancouver problem, because over the past decade it has spread to the suburbs and has gone to other urban centers, such as Victoria. Even if you save enough money for a down payment, hard work does not pay off as before. ”