Vancouver housing fever eases even before tax

Bloomberg

Canada’s hottest housing market may be cooling. Home sales in Vancouver fell a third straight month in July, the Canadian Real Estate Association said, with price gains also showing signs of slowing.
The data should be a relief to buyers and policy makers who have been growing increasingly worried about affordability in the city, and suggest Vancouver’s market was slowing even before the provincial government set a foreign buyers’ tax earlier this month. The realtor group cited lack of affordability for falling sales in a market where prices are growing at double-digit rates.
“It does look like we have seen momentum slow a bit,” said Robert Kavcic, a Bank of Montreal senior economist in Toronto. The low supply of homes for sale and the city’s economic strength mean there’s a good case for a soft landing, Kavcic said in a phone interview.
Real estate transactions in Vancouver declined 6.7 percent to 3,411 on the month and are down 18.3 percent from a year ago, the real estate group said in its release. Monthly benchmark price gains slowed to 1.4 percent in July, from as high as 5.3 percent in May.
Another sign of a Vancouver slowdown is that sales as a share of new listings fell to 62.9 percent in July, down from 71 percent a month earlier.

STILL EXPENSIVE
Still, prices for homes in Vancouver are up 33 percent from a year ago, according to the realtor group’s house price index, and remain at levels that are too steep to many buyers. The average Vancouver sales price of C$1.04 million ($810,000) is the highest in Canada, and remains above the C$723,342 sales price in Toronto, the country’s biggest city.
Today’s numbers suggest that Vancouver “sales are being reined in by a lack of inventory and a further deterioration in affordability,” Gregory Klump, the realtor group’s chief economist, said in the report. “It will take some time before the effect of the new tax on sales and prices can be observed.”
Nationwide existing home sales also declined for the third straight month in July, down 1.3 percent from the previous month, to 44,854. The average price of a home sold in July was 0.6 percent down on the month. From a year earlier, the average sales price of C$480,743 rose 9.9 percent.
Toronto, Canada’s most populous city, saw resales rise by 0.5 percent on the month, and Montreal posted a 3.6 percent increase. The average sales price in Canada’s biggest city was up 0.1 percent in July and 16.5 percent from a year ago.