Vancouver home prices may have seen ‘final hurrah,’ Royal LePage says

Vancouver home prices get one 'final hurrah'

TORONTO — Royal LePage CEO Phil Soper says house prices in Greater Vancouver grew 30.6 per cent year-over-year in the third quarter of the year, marking what may have been the real estate market’s “final hurrah.”

The real estate agency says the average house price in the region soared to $1.19 million in the three-month period that ended Sept. 30, up from $914,705 during the same quarter last year.

The average price of a home in Greater Toronto rose to $693,154 over the third quarter, up 13.6 per cent compared to last year, when the average home price was $610,308.

In Edmonton, where the decline in oil prices has hurt the real estate market, the average cost of a home was down 3.1 per cent to $374,712 from $386,829 a year ago.

Royal LePage says its national house price composite — a figure based on 53 of the country’s largest real estate markets — showed that the average price of a home climbed 12 per cent from a year ago to $545,414 in the third quarter.

Soper says he expects that price growth in Vancouver will slow or even reverse in the months ahead as the effects of recent federal and provincial government rule changes begin to be felt.

In August, the B.C. government introduced a 15 per cent tax on foreigners purchasing homes in Vancouver.

Home sales in the city have been falling since then — with recently released figures indicating a 32.6 per cent drop in September compared to the same month last year — but prices have continued to rise.

“It often takes about six months … for prices to catch up with a change in demand, either on the upside or the downside,” says Soper.

However, he adds that the trend of declining home sales started long before the introduction of the foreign buyer tax. Many would-be buyers have simply moved to the sidelines as prices have spiralled out of their reach, he says.

Soper says the new tax can’t be blamed as the sole cause if home prices begin to drop in the coming quarters — but it certainly may be the catalyst.

“You take a lineman in professional football — a great, big human being — and they’re sort of teetering on their heels,” he says.

“A child comes along and pushes them on their chest and they topple over. The tax impacted a very small group of people in a very narrow geographic and house price range in one city, yet it came at a time when the market was already cooling. It represents that push in the chest to something that was already ready to change.”

As for new mortgage rules introduced by Ottawa earlier this month, Soper says fears associated with those changes have been exaggerated.

He predicts that prices in Ontario and many other parts of the country will continue to rise, in spite of new measures including a requirement that lenders apply stress tests to all mortgage borrowers.

“There will be some transactions taken out of play with the new regulations,” says Soper. “It’s just a mathematical certainty. But I don’t think it will be enough to reverse the positive trend that we see across the country.”

Writing about the mortgage changes, chief economist Helmut Pastrick of Vancouver-based Central 1 Credit Union predicts the reaction of the market across the country will be felt quickly with monthly sales declining for about six months, estimating a drop in sales of 10 to 20 per cent. He also forecasts that national housing prices could slip by five to 10 per cent.

— Follow @alexposadzki on Twitter.

Alexandra Posadzki, The Canadian Press

Just Posted

Over-budget bids cause delay of four Surrey school projects

Two projects have gone back out to tender, two awaiting ‘revised budget approval’ from Ministry of Education

Fees ensure patients have access to parking at SMH, FHA says

Fraser Health Authority hasn’t heard yet from city hall about pay parking at Surrey hospital

Free hospital parking a non-starter in White Rock

City considering task force to look at parking generally – Walker

Surrey memories: How the ‘IGUISBCSIR’ Facebook page became a hub for anecdotal history

Former Whalley resident Wes Mussato launched the group in 2011, 11 years after he’d moved to Ontario

VIDEO: B.C. legislature clerk, sergeant at arms suspended for criminal investigation

Clerk of the House Craig James, Sergeant-at-arms Gary Lenz on administrative leave

Former NHL player and coach Dan Maloney dies at 68

Maloney coached the Toronto Maple Leafs and Winnipeg Jets

Ex-MSU president charged with lying to police about Nassar

Lou Anna Simon was charged Tuesday with lying to police during an investigation

Police aim to prevent retaliation after Hells Angel found dead under B.C. bridge

IHIT confirms Chad Wilson, 43, was the victim of a ‘targeted’ homicide

Otter makes a snack out of koi fish in Vancouver Chinese garden

Staff say the otter has eaten at least five fish

Police looking into two more incidents at private Toronto all-boys’ school

Police and the school have said two of the prior incidents involved an alleged sexual assault

B.C. lumber mills struggle with shortage of logs, price slump

Signs of recovery after U.S. market swings, industry executive says

25% of Canadians still won’t say they use pot, survey says

Statistics Canada poll says Canadians on average were 18.9 years old when they first tried pot.

Canucks’ 50/50 jackpot expected to surpass $1 million

The guaranteed prize for one lucky winner will be $500,000 minimum when Vancouver hosts LA Nov 27

Most Read