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.

Just Posted

Why “Weir” Ready: with Dr. Shannon Waters

This is part one of a feature series by the Cowichan Watershed Board

Robert Barron column: A Canadian hero I wish I had talked to

Almost nobody was there on that cold Newfoundland day when Terry Fox started his run

Caps improve to 3-0

Lynn and Arquiett score two each as Caps double up Chiefs

Carving in Cowichan provided road to recovery for stroke victim

“I didn’t know if I’d be able to get out of bed or walk, let alone carve”

VIDEO: Vancouver Island mayor details emergency response after fatal bus crash

Sharie Minions says she is ‘appalled’ by condition of road where bus crashed

B.C. VIEWS: Cutting wood waste produces some bleeding

Value-added industry slowly grows as big sawmills close

Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

Some say the high cost of logs is the major cause of the industry’s decline in B.C.

Federal food safety watchdog says batch of baby formula recalled

The agency says it’s conducting a food safety investigation

UVic president offers condolences after two students killed in bus crash

‘We also grieve with those closest to these members of our campus community,’ Cassels says

Coming Home: B.C. fire chief and disaster dog return from hurricane-ravaged Bahamas

The pair spent roughly one week on Great Abaco Island assisting in relief efforts

Newcomer Ferland lines up with sniper Pettersson as Vancouver Canucks camp opens

Ferland provides more depth and a scoring threat up front, Pettersson says

Intelligence official charged seemed to be ‘exemplar of discretion’: UBC professor

Professor Paul Evans says he served on Cameron Ortis’s doctoral dissertation committee

B.C. police watchdog to investigate man’s head injury during RCMP arrest

Suspect fled on a bicycle and fell off when an officer attempted to stop him

Most Read