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

A COVID-19 exposure has been reported at Abbotsford School of the Integrated Arts (Sumas). (Abbotsford School District)
COVID-19 exposure reported at Abbotsford high school

Abbotsford School of Integrated Arts’ exposure on Oct. 19, 20 and 21

Thomas Dawson Peacock
Surrey man, 32, charged with sexual interference

Incidents alleged to have happened in Surrey and Abbotsford

Highstreet shopping centre is holding its Land of Boo from now until Halloween. Visitors are invited to dress in costume and take their picture in front of one of the Halloween-inspired backdrops. (Highstreet photo)
Abbotsford celebrates Halloween with pandemic in mind

Socially distanced events replace usual spooky activities

Abbotsford resident have submitted a number of jack-o-lantern photos. (Pixaby)
SLIDESHOW: Abbotsford shows off jack-o-lanterns

Social media users submit jack-o-lantern photos for Halloween 2020

The number of new COVID-19 cases has risen sharply in Vancouver and the Fraser North region over the last week.
Chart: Tyler Olsen
CHARTS: Weekly COVID-19 case counts continue to rise in Fraser Valley

The number of new COVID-19 cases has risen sharply in Vancouver and the Fraser North region.

Over the years, Janice Blackie-Goodine’s home in Summerland has featured elaborate Halloween displays and decorations each October. (File photo)
QUIZ: How much do you really know about Halloween?

Oct. 31 is a night of frights. How much do you know about Halloween customs and traditions?

A Mercedes SUV is covered at a gas station in the Clayton area following a deadly shooting there on Sept. 28, 2019. (File photo)
This house at 414 Royal Ave. became notorious for its residents’ and visitors’ penchant for attracting police. It was also the site of a gruesome torture in August 2018. It was demolished in 2019. KTW
6-year sentence for Kamloops man who helped carve ‘rat’ into flesh of fellow gang member

Ricky Dennis was one of three men involved in the August 2018 attack

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

An online fundraising campaign in support of the six-year-old boy, Edgar Colby, who was hit by a car on Range Road Oct. 25 has raised more than $62,000 in a day. (Submitted)
$62K raised in 1 day for boy in coma at BC Children’s after being hit by vehicle in Yukon

The boy’s aunt says the family is “very grateful” for the support they’ve received from the community

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Health care employees take extensive precautions when working with people infected or suspected of having COVID-19. THE CANADIAN PRESS/Chris Young
WorkSafeBC disallows majority of COVID-19 job injury claims

Health care, social services employees filing the most claims

Vancouver Symphony Orchestra Maestro Otto Tausk. (Photo: vancouversymphony.ca)
50/50 lotto players buck up for Metro Vancouver musicians hit hard by COVID

‘Rapidly growing jackpot’ for VSO’s 50/50 draw as they go online with TheConcertHall.ca

Conservative leader Erin O’Toole rises during Question Period in the House of Commons in Ottawa on Wednesday October 28, 2020. (Adrian Wyld/The Canadian Press)
Conversion therapy ban gets approval in principle, exposes Conservative divisions

Erin O’Toole himself voted in favour of the bill, as did most Conservative MPs

Most Read