Drop in Vancouver home sales started before new tax: CMHC

OTTAWA – A report by Canada Mortgage and Housing Corp. says home sales in Vancouver were already slowing before the plunge in recent months in the wake of a new tax on foreign buyers.

In its housing market insight report into the preliminary impact of the foreign buyers tax, CMHC said Thursday it’s too early to determine the long-term impact of the decision.

The housing agency says the drop in sales in August and September continued an already established trend, particularly at the higher end of the price range.

Robyn Adamache, CMHC’s principal market analyst for Vancouver, said foreign buyer activity is one of many factors in Vancouver.

“Equally important are housing and land supply constraints as well as the economic and demographic fundamentals that drive housing demand,” Adamache said in the report.

“Sales and prices had already started to dip before the introduction of the foreign buyers tax, so it basically underlined existing trends in the resale market.”

The Real Estate Board of Greater Vancouver reported earlier this week that September home sales fell 32.6 per cent compared with the same month last year. That followed a 26 per cent year-over-year decline in August and a dip of about 19 per cent the previous month.

The B.C. government implemented a 15 per cent tax on foreign buyers in August.

Provincial government data shows an increase in foreign homebuyers in the days before the tax came into effect on Aug. 2, but then a sharp drop in the month that followed.

For Metro Vancouver, the share of foreign buyer transactions made up 19 per cent of the market from July 15 to Aug. 1, compared with 10 per cent for June 10 to July 14.

The share of foreign buyer transactions fell to one per cent for the remainder during Aug. 2 to Aug. 31.