B.C. government measures designed to cool the Vancouver housing market will become full effects in 2019, setting the stage for continuing weak sales.
Numerous provincial policies, coupled with a federal stress test that makes it tougher for borrowers, have already had a huge psychological impact on the Vancouver area, said Brian Yu, deputy chief economist at the central credit union. Canada's banking regulator carried out a stress test on January 1, 2018, making it difficult for buyers to qualify for mortgages.
Sales in the Vancouver region decreased by 23 percent in 2018 compared to 2017. The trend of many different expectations among buyers and sellers is expected to expand in 2019, Yu said, which predicts regional sales could be reduced by 0.8 percent 2019 compared with 2018.
"We will see an ongoing gap between sellers who are willing to sell and what buyers are able and willing to compete for property," he said in an interview. "It's very low in an environment with low sales".
The NDP's provincial government will begin collecting what it calls the speculative tax in 2019. The annual tax is directed mainly to residents outside the province who own property in urban markets in British Columbia. These funds tend to be secondary homes or holiday homes that are not rented.
B.C. the government will also begin imposing an annual income that will direct homeowners to property valued at more than $ 3 million. The tax on speculation and the new income are part of a wide range of housing policies originally presented in the NDP budget in February 2018.
While the accessibility crisis continues, average prices for individual homes, flats and houses in the Vancouver region could fall by 3% in 2019 compared to 2018, predicts Yu Yu. He adds that the trend of weak sales and flat or slightly lower prices could continue in 2020 and 2021.
In August 2016, the previous LB Liberal government imposed a 15 per cent tax on foreign buyers in the Vancouver area, which contributed to a recession in the separated housing segment during the second half of 2016 and early 2017. After the uncertain recovery in housing market in 2017, the PR PRD government increased the foreign customer buyers' fee to 20 percent in February 2018 and expanded the tax on other urban markets in the province.
The real estate market in the Vancouver region has faced "intense pressure" for much of 2018, worsened by rising mortgage rates, said the senior economist at the Bank of Montreal, Sal Gutieri.
"The demand is so much weaker that few buyers now can get discounts on prices from sellers," writes economists at Royal Bank of Canada, Craig Wright and Robert Hogg, in a research note.
However, Mr Yu said the British Columbia economy is expected to remain strong over the next three years, while the unemployment rate should remain relatively low, and there are no signs suggesting a global financial shock.
"At home prices are eroding, but they will not fall," he said. "We have succeeded in a very gentle place in the housing sector, and this is indeed an event triggered by politics." The labor market is strong, "We are not in an economic recession or in a crisis of confidence."
The average price for individual houses sold on the west side of Vancouver reached $ 3,218,333 in November 2017. Since then, the price of the average price has fallen by 11 percent, but is still unavailable for most potential buyers in the amount of 2.860.000 USD.
The market for houses and town houses showed signs of endurance at the beginning of 2018, although in recent months it has noticeably softened. The price for houses sold in Greater Vancouver was on average $ 690,190 in November, up 7.7 percent from April.
But even on entry levels of apartments remain too expensive for many buyers for the first time, said Paul Kershaw, founder of Generation Squeeze, a lobby group set up to represent Canadian attitudes in their 40s and younger. "The prospect of home ownership for a younger demographic group has been hurt more in British Columbia than in any other province," he said.
The rapid rise in real estate prices from mid-2013 to mid-2016 in the Vancouver city caused many residents to move elsewhere in the province, helping to raise prices in markets like Victoria and Sunny Coast, Kershaw said.
The analysis by Generation Squeeze showed that the domestic property rate in British Columbia for residents aged between 35 and 44 was 67 per cent in 2016, compared with 78 per cent in 1977.
"We had an effective earthquake in the real estate sector of BC," said Mr Kershaw. "It's not just Vancouver's issue, because over the past decade it has expanded to the suburbs and went to other urban centers like Victoria. Even if you save enough for a down payment, hard work does not pay off as used."