The Victoria Real Estate Board says new federal mortgage qualification rules and B.C. government housing measures likely caused home sales last month to fall 26 per cent compared to the same time last year.
According to the Victoria Real Estate Board, there were 688 properties sold in the region last month, 241 fewer than the 929 properties sold in March 2017. Condo sales were down 28 per cent compared to last year and single-family homes fell 31 per cent from the year previous.
“As we expected, March sales are tracking lower than in 2017,” Victoria Real Estate Board President Kyle Kerr said in a statement.
“This is likely due to a number of factors that have created hesitation in consumers, including recent heavy measures by the provincial government to reduce the value of home prices and the federal government’s new mortgage qualification rules. Combine these factors with rising interest rates and you’ve got a housing market that is in transition due to outside influences. Every time there is intervention into a market, it takes a few months for the market to rebalance. With the continual changes of late from different levels of government, our market is experiencing a new cycle of ongoing uncertainty.”
In February’s budget, the B.C. government announced it would be introducing a new speculation tax, increasing the foreign buyers’ tax from 15 to 20 per cent and cracking down on loopholes used to make money in the housing market in an effort to bring down house prices. The provincial government also announced $6 billion to build new housing over the next ten years.
New rules by Canada’s federal financial regulator came into effect on Jan. 1, 2018 for Canadians getting, renewing or refinancing a mortgage. Among the new rules is a requirement to stress test uninsured borrowers. Before the new rules, only insured borrowers had to undergo a stress test. By law, borrowers with a down payment of under 20 per cent for a home must purchase mortgage insurance.
However, Victoria home sales in March 2018 did go up 26 per cent compared to February. Prices have also continued to climb, with a single-family home in Greater Victoria at an average selling price at $903,052. In March 2017, the average selling price was $846, 130. The average selling price of a condo climbed 17.3 per cent from $406,439 in March 2017 to $476,568. The average selling price of a townhouse in Greater Victoria went from $532,934 in March 2017 to $579,377 in March 2018.
“Despite all of the above, we continue to see benchmark price increases across our market and demand persists – partly due to low inventory – but also because of our highly desirable location,” Kerr said. “Specific areas and price points are experiencing varying pressure on price and demand – which creates micro-markets. We are still seeing multiple offers and above asking price sales in some segments. Active buyers in our market may see some relief as inventory is slowly growing.”