August of 2016 is looking both better and worse for home sales in Canada. Starting with lesser news, between July and August, there has been a decline of 3.1% in National home sales. This makes for the greatest monthly drop since December 2014. Along, with possible impact, is a 2.7% drop in newly listed homes also seen between July and August.
The introduction of an additional property transfer tax for foreign buyers in Metro Vancouver at the beginning of August (August 2nd) may or may not have affected the market.
CREA President, Cliff Iverson, sees it as the culprit, stating “The sudden introduction of the new property transfer tax on homes purchased by foreign buyers in Metro Vancouver has created a cloud of uncertainty among home buyers and sellers”.
With its debut, chances are that foreign buyers are putting a hold on their home purchasing to assess what it really means for the buying and purchasing of homes in Vancouver. A decently substantial 15% tax is a justifier for tentative buyers. And, Vancouver is a hotspot for foreign attention, being Canada’s largest city.
With 60% of Canada having seen a decline from month-to-month, Vancouver isn’t the sole culprit, though it has seen a substantial drop.
With this bad news, along comes some good news. The month of August’s sales are up! Between this year and last year, last August’s sales were 10.2% lower. Accompanying is a 5.4% rise in the average home price, bringing it to $456,722. Excluding two of Canada’s main hubs, Greater Vancouver and Toronto, the average price sits at $357,033, a solid $100,000 less. Sellers might not be thrilled to hear that, but it might be just what buyers want to hear for the rest of Canada.
Sales are still up! More good news with three-quarters of Canadian markets seeing a rise, Toronto is taking the lead. Montreal is also seeing a 2.5% increase.
This asks the question, what will we see in the next few months for Vancouver home sales, and the rest of Canada?