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BC Home Sales to Climb 10.4% in 2016 Despite Vancouver Slowdown: BCREA H ome sales across the province are forecast to climb 10.4 per cent to a record 113,000 total units in 2016, before slowing again in 2017, according to a quarterly housing forecast issued August 25 by the British Columbia Real Estate Association (BCREA). Total BC residential sales for the whole of this year are expected to eclipse the previous high of 106,310 units in 2005 – despite Lower Mainland home sales falling in July and the first few weeks of August. Unprecedented sales in the early part of the year, and strong growth in other parts of the province, will more than cancel out any second-half losses seen in the Lower Mainland, predicted BCREA. Effects of Foreign Buyer Tax “The introduction of a 15 per cent tax on foreign national home buyers in Metro Vancouver is expected to accelerate a moderating trend in the market that began earlier in the year,” said Cameron Muir,
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BCREA chief economist. “However, other regions of the province are performing above expectations and at the provincial level, largely offsetting Metro Vancouver’s deceleration.” The average BC home price is forecast to increase 11 per cent to $706,900 this year and a further 5.2 per cent to $743,700 in 2017. Price Rises Predicted to Slow Muir offered some hope to buyers aiming to get into the market but struggling to afford high prices. “While the cyclical nature of housing markets can exact a harsh toll on affordability in the short term, there is some relief for beleaguered home buyers on the horizon,” added Muir. “Housing starts in the province are expected to reach near record levels this year, and the highest amount since 1993. In Metro Vancouver, a record number of homes are now under construction.
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“A moderation in housing demand combined with a rising number of both new and resale homes on the market is expected to create more balance and less upward pressure on home prices.” Sales Dropping in Vancouver The BCREA forecast came after early MLS® sales data revealed that the number of homes changing hands in the first few weeks of August declined by 63 per cent compared with the same period last year. The drop came immediately after the 15 per cent increase in Property Transfer Tax for overseas buyers was introduced August 2, leading to reports of real estate deals collapsing around the region. However, local experts pointed out that it was too soon to see any long-term trend. Vancouver REALTOR® Keith Roy told REW.ca that it was important such data are not taken out of context. He said, “I think it’s an emotional reaction to an unexpected policy change on the part
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of the buying public, who are taking a small wait-and-see approach. “I think the market will normalize as we continue into the fall. People are still ready to buy – I’ve sold two properties for multiple offers over asking price in the past two weeks.” Risk of Vancouver Over-Correction However, mortgage broker and industry analyst Peter Kinch warned, “The market could be at risk of an over-correction from this kind of information. The real estate industry has a natural cycle that usually includes a summer lull, and this has combined with the new foreign buyer tax. There will likely be a slowdown in overseas buyers and this combined with the fact that locals are on holiday could create an exaggerated effect and make August and September sales look terrible.” Kinch added, “I fear that this will get misinterpreted by the media and the market will overreact.”
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