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The recent slowdown in BC residential real estate transactions won’t be enough to hold back the Canadian housing market from breaking an all-time annual sales record, one of Canada’s biggest banks says.
So although RBC has just downwardly revised its resale housing market forecast, now calling for 531,600 units to change hands in 2016 (previously it expected 545,800 sales) that’s still enough to surpass the current banner year of 2007, when 519,800 units were sold.
The new tally projection would also represent an 8.9 per cent increase over last year’s sales total.
The more-subdued outlook can mostly be traced to the bank’s downgraded prediction for BC, the most-active provincial housing market next to Ontario since 2013, the year it overtook Quebec.
“Our view is that BC’s market — and by extension the overall Canadian market — has entered a cooling phase, although it is most likely to still set a new high-water mark in terms of resales due to the strength earlier this year,” writes Robert Hogue, RBC’s senior economist, in a report discussing the latest forecast.
Earlier this year RBC upwardly revised its 2016 forecast due to the Canadian housing market’s strong performance out of the gates.
But the bank’s economics department now forecasts 111,600 transactions will occur in BC this year, down from the upwardly revised 128,200 it predicted earlier this year. That’s a difference of 16,600 units, while the national forecast has been pushed down by a total of 26,000 sales.
Last month, year-over-year home sales slumped in 60 per cent of all local markets the Canadian Real Estate Association (CREA) tracks, with BC’s Vancouver and Fraser Valley — as well as Calgary and Edmonton in Alberta — leading the way in declines.
July was also the third consecutive month in which sales were down from the previous month, CREA noted.
RBC calls attention to the fact that the slowdown in Vancouver and Fraser Valley existing-home sales “almost entirely pre-dated” the BC government’s announcement of the new tax on foreign buyers in Metro Vancouver.
On July 25th, the BC government announced a 15 per cent property transfer tax that would apply to foreign nationals and foreign corporations buying residential properties in Metro Vancouver. It came into effect on August 2nd.
”We believe that the surprise imposition of a tax on home purchases by foreign nationals by the BC government is a material event that will fuel the notion that British Columbia’s housing policy has shifted toward engineering a cooldown of the Metro Vancouver market,” writes Hogue.
“This perceived shift and the significant moderation of activity in recent months have prompted us to revise downwardly our forecast for home resales in the province,” the economist continues.