According to Fitch Ratings, there are evidences that the housing market in Vancouver has started cooling down and becoming regulated, due to the new foreign buyer’s tax that recently took effect to boot an increase in unemployment could cause the price to further decrease.
In a previous research titled Vancouver Tax Raises Employment Risk to House Prices, Fitch ratings commented: “We believe there is some risk to residential house prices in Vancouver if there is a rise in unemployment. The city’s job market has been strong. Statistics in Canada reported that Vancouver added 83,500 jobs over the previous year. Its unemployment rate fell to 5.5%, the lowest rate ever in the country.
However, Canada’s other major metropolitan areas have seen much slower growth. In July, Ontario’s unemployment rate was unchanged at 6.8% and Montreal’s stood at 7.9%.”
There’s no cause for alarm as at now. For the moment, the agency mention the issues of affordability to be worrying, as the benchmark price increased to 24% over the years during last month. The government made an estimate of 7.9 of housing investment in Vancouver which was derived from foreigners between the 10th of June and the 14th of July, however the impression it has is slowly decreasing. Fitch said, “The tax is part of a broader effort to slow the country’s housing markets. Last year, the minimum down payment on loans insured by Canada Mortgage and housing Corporation, was increased to 10% on the portion of the loan over C$500,000. This June, the finance minister announced the formation of a working group that will make recommendations designed to increase affordability and bolster the market’s stability.” Fitch Rating think the market could be going through a steady waning, while the latest measures could cause the market to somehow cool.
Fitch also said “Canadian Real Estate Association data indicated that the number of national sales fell by 2.9% since last July. Vancouver’s monthly sales have declined substantially by 21.5% since they peaked in February. While there is no direct relationship between the number of sales and prices, we believe declines in the number of sales of high magnitudes are worth consideration.”