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The BC legislature passed legislation last night that institutes the foreign buyer tax. Real Estate Board of Greater Vancouver President Dan Morrison issued the following statement on this development:

 

"Hundreds of British Columbians head into the BC Day long weekend facing stress and uncertainty concerning the largest financial transaction of their lives because of the provincial government's abrupt intervention into the Metro Vancouver housing market this week.

 

“The Premier’s decision not to exempt transactions where home sellers have an accepted contract in place, with a non-Canadian buyer, that will not close before August 2 is needlessly causing real harm to real people. Our members are scrambling to try and help people understand how their personal and financial situations have been impacted. 


"While it’s the government’s prerogative to implement taxes, people deserve to be treated fairly. They have a right to understand the cost they’re expected to pay when they enter into a legal agreement.” 

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VICTORIA – Foreign buyers purchased more than $1 billion in real estate in B.C. in five weeks, new government figures show.


The amount, $1.024 billion, represents 7.9 per cent of the total $12.89 billion of real estate sold in the province between June 10 and July 14.


Most of those foreign buyers — 73.3 per cent — were in Metro Vancouver, according to provincial data.


In the Metro region, foreign citizens bought $885 million in real estate out of a total $8.8 billion during the time period, representing 10 per cent of purchases.


The number of foreign purchases in the City of Vancouver was almost 11 per cent, compared to 18 per cent in Richmond, 8 per cent in Surrey and almost 18 per cent in Burnaby.


The average purchase price by foreign citizens in Metro Vancouver was $946,945 compared to $911,425 by Canadian citizens or permanent residents.


The latest data updates figures government released several weeks ago that some criticized as lowball estimates that didn’t properly track the impact of foreign buyers.


Premier Christy Clark announced a 15-per-cent tax on foreign buyers Tuesday.

 

Rob Shaw

Vancouver Sun

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Canada's banking regulator said on Tuesday it will require the country's banks to test how they would withstand a 50 percent drop in property prices in Vancouver and a 40 percent decline in Toronto.

 

The move, which builds on an existing requirement that banks test their resilience to a 30 percent decline in home prices across all regions, is the latest in a series of measures by Canadian authorities to counter a risk posed by soaring house prices in the two Canadian cities.

 

The Office of the Superintendent of Financial Institutions (OSFI) said earlier this month it was tightening oversight of mortgage lending, citing concerns about record household debt and a sharp jump in prices.

 

Property markets have surged in Vancouver and Toronto since the 2007-2009 financial crisis, fueled in part by foreign investors, mostly from mainland China.

 

Canada's banking regulator does not publicly announce the results of bank stress tests in the same way as its counterparts in the United States and Europe, but it considers the tests important in ensuring the country's banks have strong enough capital buffers to withstand market shocks.

 

OSFI said that, previously, only the impact on banks' core capital ratios was assessed in the test but, this year, the impact on banks' leverage ratios, which do not take into account risk weightings used by banks, will also be tested.

Canadian Finance Minister Bill Morneau announced in June that the Liberal government would set up a working group of federal, provincial and municipal officials to recommend policy changes aimed at preventing a housing bubble.

 

British Columbia introduced a new 15 percent property transfer tax on foreign real estate buyers in Vancouver on Monday.

 

Matt Scuffham

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The B.C. government plans to tax foreigners who buy residential property in the Vancouver area – an announcement that follows months of pressure to address foreign speculation that many have blamed for the region’s superheated housing market.

 

Finance Minister Mike de Jong said the 15 per cent tax, which takes effect Aug. 2, will apply to the sale of all residential properties within Metro Vancouver, excluding treaty lands in the Tsawwassen First Nation. The tax will apply to buyers who are not Canadian citizens or permenant residents, as well as corporations that are either not registered in Canada or controlled by foreigners.

 

Mr. De Jong says the additional tax on a $2-million home would amount to $300,000. He said the law gives the province the ability to adjust the tax rate to between 10 and 20 per cent.

 

The announcement is the latest in a series of measures aimed at addressing skyrocketing housing prices in the Vancouver region -- an issue that is expected to become central to next spring’s provincial election. The debate has been overshadowed by concerns about foreign buyers and empty homes, as prices increased by more than 30 per cent in the past year alone.

 

Earlier this month, the province released the first batch of statistics on foreign purchases, which showed about five per cent of purchasers in the Vancouver region over several weeks in June were foreign buyers.

 

The figures indicated foreign nationals spent more than $1-billion on property in B.C. between June 10 and July 14, with 86 per cent being made on purchases in the Vancouver region.

 

Last May, de Jong said he wasn’t in favour of a tax on foreign investment, saying he worried it would send the wrong message to Asia-Pacific investors.

 

The B.C. Liberal government will also introduce legislation this week that will allow the City of Vancouver to impose a tax on vacant homes; and follow through on an earlier promise to end self-regulation of the real estate industry.

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According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined further in June 2016.


Highlights:

  • National home sales fell 0.9% from May to June.
  • Actual (not seasonally adjusted) activity came in 5.2% above June 2015.
  • The number of newly listed homes rose 2.2% from May to June.
  • The MLS® Home Price Index (HPI) rose 13.6% year-over-year in June.
  • The national average sale price climbed 11.2% in June from one year ago; net of Greater Toronto and Greater Vancouver, it advanced 8.4% year-over-year.
The number of homes trading hands via Canadian MLS® Systems fell by 0.9 percent month-over-month in June 2016. Monthly declines in each of the past two months have left sales activity 2.6 percent below the record set in April 2016.

Sales activity was down from the previous month in about half of all markets in June, with declines in Greater Vancouver, the Fraser Valley and Greater Toronto having eclipsed gains in comparatively less active housing markets.


“While national sales activity remains strong, there are still significant differences in housing market trends across Canada,” said CREA President Cliff Iverson. “While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where homebuyers are cautious and uncertain about the outlook for their local economy,” he added. “All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”


“June sales extended trends observed the previous month,” said Gregory Klump, CREA’s Chief Economist. “As was the case in May, the monthly decline in national sales activity was led by the Lower Mainland of British Columbia and markets in or around the GTA. In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year-over-year price gains have been running in double-digit territory since late last year.”


Actual (not seasonally adjusted) sales activity was up 5.2 percent year-over-year (y-o-y) in June 2016. Year-over-year increases have been steadily losing momentum since February 2016.


The number of newly listed homes rose by 2.2 percent in June 2016 compared to May. New supply climbed among a broad majority of all local markets, led by Greater Toronto, Oakville-Milton, Montreal, Quebec City, and B.C.’s Fraser Valley. The return of activity in Fort McMurray following its evacuation in May also contributed to the national increase in new listings.


With sales down and new listings up, the national sales-to-new listings ratio eased to 63.3 percent in June 2016, compared to 65.3 percent in May. A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.


The ratio was above 60 percent in about half of all local housing markets in June, virtually all of which are located in British Columbia, in and around Toronto and across Southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.6 months of inventory on a national basis at the end of June 2016, which is unchanged from May’s reading and the lowest level in more than six years. The number of months of inventory has been trending lower since early 2015, reflecting increasingly tighter housing markets in B.C. and Ontario. It currently sits near or below two months in a number of local markets in British Columbia, the GTA and environs and Southwestern Ontario.

egate Composite MLS® Benchmark price rose by 13.6 percent y-o-y to $564,700 in June 2016, the biggest gain since December 2006.

For the fifth consecutive month, y-o-y price growth accelerated for all Benchmark property types tracked by the index.

Two-storey single family home prices continued to post the biggest y-o-y gain (+15.5 percent), followed by one-storey single family homes (+14.0 percent), townhouse/row units (+13.6 percent), and apartment units (+9.8 percent).

While prices in 9 of the 11 markets tracked by the MLS® HPI posted y-o-y gains in June, price growth continues to vary widely among housing markets.

Greater Vancouver (+32.1 percent) and the Fraser Valley (+35.5 percent) posted the largest y-o-y gains, followed by Greater Toronto (+16.0 percent), Victoria (+15.7 percent), and Vancouver Island (+10.6 percent). By contrast, prices were down -4.1 percent and -1.4 percent y-o-y in Calgary and Saskatoon, respectively.

Home prices gained further traction in Regina (+3.6 percent y-o-y), Greater Montreal (+1.9 percent y-o-y), and Ottawa (+1.0 percent y-o-y). Home prices in Greater Moncton recorded their eleventh consecutive year-over-year gain, rising 7.9 percent.

The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being distorted by changes in the mix of sales activity from one month to the next.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets. The actual (not seasonally adjusted) national average price for homes sold in June 2016 was $503,301, up 11.2 percent y-o-y.

If these two housing markets are excluded from calculations, the average price is a more modest $374,760 and the gain is trimmed to 8.4 percent y-o-y.

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The Bank of Canada announced on July 13th, 2016 that it was keeping its trend-setting target overnight lending rate at 0.5 per cent.

 

The announcement repeated many of the themes from its announcements and Monetary Policy Reports (MPRs) published in late 2015 and early 2016. Chief among these themes is how the Bank is still counting on the continuation of low interest rates and stronger U.S. economic growth to buoy Canadian exporters amid ongoing weakness in Canadian business investment.

 

However, the Bank again reduced its annual forecast for Canadian economic growth in light “a weaker outlook for business investment and a lower profile for exports reflecting a downward adjustment to US investment spending”. It also recognized how recent economic growth was reduced by the Alberta wildfires; however, it expects Canadian economic growth will pick up in the third quarter as oil production resumes.

 

The Bank also recognized that inflation has recently been running slightly higher than it previously expected but noted that inflation “is still in the lower half of the Bank’s inflation-control range”. It expects that the increase in inflation due to past weakness in the Canadian dollar will be temporary and will “dissipate in late 2016”.

 

While the Bank judges that “the risks to the profile for inflation are roughly balanced”, it expressed concerns about “the implications of the Brexit vote”, which it described as being “highly uncertain and difficult to forecast.” Its implications may ultimately result in the need to lower interest rates. However, lower interest rates would also likely further raise concerns the Bank has about Canadians’ “financial vulnerabilities [which] are elevated and rising, particularly in the greater Vancouver and Toronto areas.”

 

With all of these factors in mind, there is nothing in the Bank’s latest policy interest rate announcement to suggest that it will begin to raise interest rates until well into 2017 at the earliest.

 

As of July 13th, 2016, the advertised five-year lending rate stood at 4.74 per cent, up 0.1 from both the previous Bank rate announcement on May 25th and from one year ago.

 

The next interest rate announcement will be on September 7th, 2016, with the next update to the Monetary Policy Report to be released on October 19th, 2016.

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The British Columbia Real Estate Association (BCREA) reports that a record 12,906 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in June, up 14.3 per cent from the same month last year. Total sales dollar volume was $8.97 billion in June, up 25.7 per cent compared to the previous year. The average MLS® residential price in the province was up 10 per cent year-over-year, to $694,925.


“Robust housing demand in the Lower Mainland, Vancouver Island and the Okanagan drove sales growth in June,” said Brendon Ogmundson, BCREA Economist. “At the same time, the inventory of homes for sale continues to slide lower, creating very tight market conditions around the province.”


“The supply of resale homes is remarkably low across BC, but particularly so in Victoria and the Fraser Valley,” added Ogmundson. The sales-to-active listings ratio has eclipsed 60 per cent in both Victoria and the Fraser Valley, corresponding to less than two months of supply given current demand.


Year-to-date, BC residential sales dollar volume increased 53.2 per cent to $49.9 billion, when compared with the same period in 2015. Residential unit sales climbed by 30.6 per cent to 67,361 units, while the average MLS® residential price was up 17.3 per cent to $741,150.

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The trend measure of housing starts in Canada was 197,918 units in June compared to 190,302 in May, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

 

“Overall, June saw housing starts pick up pace in Canada, bolstered by apartment construction in Ontario – especially new condo construction in Toronto’s downtown core,” said Bob Dugan, CMHC Chief Economist. “However, elsewhere in the country, construction activity slowed as apartment construction eased in Quebec. Housing starts are also trending down in Alberta as a result of high inventories in the new and existing home markets of that province.”

 

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

 

The standalone monthly SAAR for all areas in Canada was 218,333 units in June, up from 186,709 units in May. The SAAR of urban starts increased by 18.1 per cent in June to 202,702 units. Multiple urban starts increased by 26.7 per cent to 142,819 units in June and the single-detached urban starts increased by 1.7 per cent to 59,883 units.

 

In June, the seasonally adjusted annual rate of urban starts increased in British Columbia, Ontario, and in the Prairies, but decreased in Atlantic Canada, and Québec.

 

Rural starts were estimated at a seasonally adjusted annual rate of 15,631 units.

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Home buyers continue to compete for homes listed for sale across the Metro Vancouver housing market.


Residential property sales in the region totalled 4,400 in June 2016, an increase of 0.6 per cent from the 4,375 sales recorded in June 2015 and a decrease of 7.7 per cent compared to May 2016 when 4,769 homes sold.


Last month’s sales were 28.1 per cent above the 10-year sales average for the month and rank as the highest selling June on record.


"While we're starting to see more properties coming onto the market in recent months, the imbalance between supply and demand continues to influence market conditions," Dan Morrison REBGV president said.


New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,875 in June 2016. This represents an increase of 1.2 per cent compared to the 5,803 units listed in June 2015 and a 6.6 per cent decrease compared to May 2016 when 6,289 properties were listed.


“Since March, we’ve seen more homes listed for sale in our market than in any other four-month period this decade,” Morrison said.


The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 7,812, a 35.9 per cent decline compared to June 2015 (12,181) and a 1.1 per cent increase compared to May 2016 (7,726).


The sales-to-active listings ratio for June 2016 is 56.3 per cent. While clearly indicative of a seller’s market, this is the lowest this measure has been since February.


Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark, while home prices often experience upward pressure when it reaches the 20 to 22 per cent range in a particular community for a sustained period of time.


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $917,800. This represents a 32.1 per cent increase compared to June 2015.


Sales of detached properties in June 2016 reached 1,562, a decrease of 18.6 per cent from the 1,920 detached sales recorded in June 2015. The benchmark price for detached properties increased 38.7 per cent from June 2015 to $1,561,500.


Sales of apartment properties reached 2,108 in June 2016, an increase of 18.8 per cent compared to the 1,774 sales in June 2015.The benchmark price of an apartment property increased 25.3 per cent from June 2015 to $501,100.


Attached property sales in June 2016 totalled 730, an increase of 7.2 per cent compared to the 681 sales in June 2015. The benchmark price of an attached unit increased 28.1 per cent from June 2015 to $656,900.

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Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.