International Property

Vancouver home prices resume gains to fresh record

Rebound in property values suggests fading impact of foreign-buyer tax

PUBLISHED : Tuesday, 06 June, 2017, 5:30pm
UPDATED : Wednesday, 07 June, 2017, 10:42pm

Vancouver home prices climbed back to a record in May, suggesting the impact of a foreign-buyer tax imposed last year is fading.

Benchmark prices in the west coast city reached a record C$967,500 (US$717,500), up 8.8 per cent from a year earlier, the Real Estate Board of Greater Vancouver said.

Average prices for single detached homes reached C$1.83 million, the highest level ever.

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It is an indication of how stubborn gains have been in Canada’s biggest real estate markets. Not even a cash crunch at Toronto mortgage lender Home Capital Group, a succession of tightening measures by the government or warnings about how price gains are detached from economic fundamentals have had a sustained cooling effect.

The number of homes sold in Vancouver was the third-highest on record for the month of May at 4,364 transactions and 24 per cent above the 10-year average, according to the real estate board.

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Sales of the more expensive detached homes dropped 17 per cent from a year earlier while for attached properties they rose 4.9 per cent, possibly reflecting a greater reluctance among homebuyers to take on large mortgages in the face of rising interest rates in the United States.

While total sales fell 8.5 per cent from a year earlier, the decline was far less than the 40 per cent drop recorded in January.

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Bidding wars on million-dollar Vancouver homes led the British Columbia government to fix a 15 per cent foreign-buyer tax in August, and since then economists have questioned how long the levy would work to cool the market.

Toronto introduced its own foreign-buyer tax this year and the International Monetary Fund said more could be done to prevent a dangerous unwinding of prices amid bloated levels of consumer debt.

The previous peak for detached homes was C$1.83 million in January 2016.