Vancouver home sales fell twice as fast as a bank thought they would after BC NDP’s new taxes

Vancouver home sales dropped by around 30 per cent in the month after the BC NDP government introduced a plan to tackle housing affordability.

But the losses look even more dramatic on a quarterly basis, according to calculations by a major bank.

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There were 2,517 home sales in March 2018, representing a 29.7 per cent drop from last year, when there were 3,579 sales, according to unadjusted data released by the Real Estate Board of Greater Vancouver (REBGV).

Sales, however, went up by 14 per cent from February.

Quarterly data provided by the REBGV showed sales dropping right across the region in every housing type.

This chart shows how sales have changed across Greater Vancouver between the first quarters of 2017 and 2018:

View image in full screen

The deepest decline was noticed in detached homes in the Port Moody/Belcarra area, where they dropped by 57.1 per cent in the first quarter compared to last year.

Quarterly sales declines are even more pronounced in seasonal adjustments crunched by TD Economics.

READ MORE: What’s in the BC NDP’s $6B plan to fix the housing market?

Taken together with pull backs in January and February, first quarter sales were down by 38.5 per cent from a peak in December 2017, according to the bank’s calculations.

LISTEN: Is Vancouver’s real estate market finally cooling?

“In fact, the current pace of sales is effectively at a five-year low,” Michael Dolega, a senior economist at TD Economics, wrote.

The bank had initially projected that sales would drop by 15.4 per cent in its provincial economic forecast; instead, sales are doing much worse than expected.

“It would appear that the impact of the Homes for B.C. 30-Point Plan has been more front loaded than we anticipated,” Dolega wrote.

Housing measures

The BC NDP introduced a slate of measures to tackle housing in the February budget.

They included the following:

• A speculation tax aimed at absentee property owners that was targeted at homeowners who don’t pay much income tax in B.C.
• A hike to the foreign buyers’ tax from 15 to 20 per cent, and expanding it to areas including Victoria, Nanaimo, the Fraser Valley and the Okanagan
• A property transfer tax (PTT) hike for homes worth more than $3 million
• A registry that would record contract assignments in the pre-sale market

When it introduced these measures, the BC NDP said it was targeting a drop in home prices.

TD Economics noted that prices have held up “relatively well” in March, though they did mark the “first monthly decline in prices in over a year.”

But the housing measures aren’t the only factor affecting the housing market, according to the bank.

READ MORE: B.C. government targets a drop in home prices as part of housing changes

They’re also feeling pressure from updated B-20 rules, as well as rising interest rates.

The bank expected that the housing market would continue to see soft conditions for some time, adding that certain measures introduced by the BC NDP wouldn’t be in effect until later.

“Prices should begin to recover toward the end of the year, but any price growth is likely to remain subdued as the region’s affordability woes are further accentuated by rising interest rates,” Dolega wrote.