First returns from new measures show drop in Vancouver home sales
It's been quite the roller coaster ride recently for the Vancouver housing market. With various factors such as low supply and foreign speculation driving up property values, the British Columbia provincial government took matters into its own hands in 2016 and implemented measures designed to normalize the market once again. Whether or not they prove effective in the long-term remains to be seen, but it has now been revealed that Vancouver home sales fell by 5.6 per cent overall in 2016.
The province's new measures are aimed at directly targeting the roadblocks that were keeping local buyers—who intended to stay in local properties—out of the market. Foreign buyers (Chinese ones in particular) had been eagerly purchasing these valuable Vancouver homes, often with no intention of living in them, which froze out Vancouverites who needed places to live but where coming from a less advantageous financial position. In August, a BC foreign buyer's tax came into effect and made it so that their home purchases would require them to pay an additional 15 per cent than they otherwise would.
Later on in November, the province doubled down on its measures with a vacant housing tax that won't come into effect fully until 2018, but will force owners of vacant homes to pay an annual tax that is equivalent to one per cent of the home's value. This regulation was met with more controversy, as many believe it unfairly targets owners of modest second homes who get occasional use out of them, as opposed to those who buy them solely for investment purposes.
Trying to gauge the true impact these measures have and will keep having is futile exercise in the present. But it does help to have short-term data, which can certainly provide some suggestions of what direction things may be trending in. Although there was a 5.6 per cent drop in home sales from 2015, 2016 was still the third-highest selling year in the metropolitan areas history, behind only 2015 and 2005. More notable is that December home sales from 2015 to 2016 dropped 39.4 per cent, a figure that could prove telling.