by Mish
In July, British Columbia imposed a 15% tax on foreign sales for the Vancouver region, effective August. Tax rates on vacant properties also changed.
The results are in: Vancouver Home Sales Fall 33% in September, Most in Six Years.
Vancouver home sales fell 33 percent in September, the most since 2010, adding to evidence measures taken by the provincial government to curb price gains are working.
Sales in the Pacific coast city dropped to 2,253 in the month, from 3,345 a year earlier, the Real Estate Board of Greater Vancouver said Tuesday. It was the largest decrease since 2010, and comes after British Columbia imposed a 15 percent tax, which took effect in August, on purchases by foreigners.
With Vancouver among global cities most at risk of a housing bubble, according to UBS Group AG, authorities are taking steps to slow the pace of gains. The federal government unveiled new rules on Monday to close a loophole that gave some non-residents a tax break when they sold a home. The changes also tighten mortgage insurance eligibility requirements even for borrowers with large down payments. That follows British Columbia’s new foreign-buyer levy, as well as Vancouver Mayor Gregor Robertson’s plan for the city to start taxing vacant homes next year.
The benchmark price for a detached property in Vancouver rose 34 percent in September from the same month last year to C$1.58 million ($1.2 million). Prices for all residential properties in metro Vancouver climbed to C$931,900, a 29 percent increase on the year and a 0.1 percent drop from the prior month.
Vancouver Bubble Spotlight
Many million dollar homes in Vancouver are nothing but rotting tear-downs on small lots. I have posted some images before.
Here’s a classic from March 3, 2012: Vancouver B.C. vs. Donegal Ireland Real Estate: What Will $890,000 Buy?
“1016 East 7th Ave, Vancouver
MLS® Number V930461
Listing Price: $899,000
Description: “Opportunity knocks! Builders and investors need look no further if they desire a view property with multi-family zoning (RM-4). This property overlooks China Creek Park, with amazing views of the North Shore mountains and close to Commercial Drive and two skytrain stations. Priced at lot value, the property is being sold ‘As Is, Where Is.’”
“Congratulations to those who guessed the “opportunity knocks” price of $899,000 for this “As Is, Where Is” bargain complete with “amazing views”, presumably through the opening where one would normally expect to find a workable door as opposed to the windows that are all boarded up.
Donegal, Ireland
With those bargain listings in hand, let’s consider a single property sale that just took place in Ireland. The previous price for the Sandhouse Hotel located in Donegal, Ireland sold at auction was $6 million.”
Please consider Spectacular Irish hotel, massive discount price
Paul Diver has purchased a spectacular 55 bedroom hotel overlooking the Donegal coastline for a mere $860,000, down from the $6 million price the original owners sought for the Sandhouse Hotel three years ago.
More Examples
Click on the post for more images.
Also consider this 2010 article Crack Shack or Mansion Game.
Progression
Volumes dry up first, then price eventually follows. A bubble of Vancouver’s magnitude will take many years to play out.
Using baseball terminology, this is the first batter in the first inning,
assuming the Vancouver bubble has indeed finally burst.
Addendum
One reader commented “Sales were dropping last spring before the tax.”
That supports my general belief that policy actions do not reverse trends but can speed them up or slow them down.
Mike “Mish” Shedlock
