Pricey Vancouver housing market weakens with buyers on sidelines
Vancouver's housing market showed continued signs of weakness in June, as affordability worries curb demand from buyers.
Sales were down 14% compared with May, the first monthly decline since January when tougher federal mortgage rules took effect, according to a report Wednesday by the Real Estate Board of Greater Vancouver. The number of transactions was 29% below the 10-year average for the month of June, the group said. Adjusting for seasonality, sales fell by about 5% to the lowest since 2013, according to Bloomberg calculations.
The figures add to evidence Canada's hottest housing markets are cooling after price gains that topped 30% early last year led governments to step in with tougher regulations, including a mortgage stress test. While prices remain robust, the slump in sales is fueling a rise in unsold inventories that could act as a drag on home values down the line.
"Buyers are less active today. This is allowing the supply of homes for sale to accumulate to levels we haven't seen in the last few years," Phil Moore, the Vancouver board's president, said in a statement. "Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening homebuyer activity today."
Benchmark home prices were little changed at C$1.09 million ($830,000), leaving them 9.5% higher than in June 2017. The number of properties for sale is the highest in three years, and is up 40% from a year ago, the board said.
Buyers may soon get more negotiating power though. The ratio of sales to active listings for detached homes declined to 11.7% in June, and prices often come down when the ratio holds below 12% for a sustained period, the Realtor group said.