Vancouver luxury real estate market faces skepticism

Recent data shows that several government intervention strategies to cool down housing prices in Vancouver have resulted to insignificant levels of doubt in the luxury real estate market into the main spring buying season.
In a report released by Sotheby’s International Realty Canada on four of the country’s leading real estate markets, there is no much difference from the existing market trend in Canada.
While Vancouver home prices are expected to return back to normal following the tax imposed on foreign buyers, it is however projected that Toronto will continue to be the hottest real estate market with the average home price exceeding $1 million. In Calgary, a steady recovery in the market is expected after the weak oil price crisis whereas sales in Montreal are expected to grow at a steady pace.
However according to Brad Henderson, presdient and CEO of Sotheby, the effects of the new regulations introduced by various provinces to address housing prices are yet to be felt.
Last year in Ottawa, the provincial government made a new regulation which required lenders to g through a stress test to determine if they will be able to repay their loan in case of any financial change. This new regulation was not required in the past for fixed-rate mortgages exceeding five years.
Additionally, the British Columbia government in August implemented a 15% tax on foreing investments while the city of Vancouver took the initiative of imposing a tax on vacant homes to make available more homes for supply on the market.
Although numerous investors are still trying to get a grip of all the new regulations, it is however expected that they will adjust to these new changes throughout the year.
Nevertheless, home sales in Vancouver worth more than $1 million dropped to 209 units in January this year and a further drop was seen in February if 27%.
But the greater drop was experienced on luxury properties that are worth more than $4 million which a 46% decline from the previous year to seven units.
Home owners of expensive homes are holding on to their properties for the time being, waiting for the right moment to sell.
Similarly in Ontario, the Finance Minister Charles Sousa is also giving a second thought to adopting a similar tax like the one in Vancouver geared towards curbing home prices.
However, in Toronto the sale of luxury homes worth over $1 million rose by 44% to 943 units while the sales of homes valued over $4 million increased by 147% from the previous year to 42 properties.
For Henderson, this trend is expected to continue into the spring season unless the government takes new steps to address the situation.