Photo: Bernard Spragg. NZ/Flickr
So much for tougher mortgage rules biting into buyer demand in BC’s housing market.
That’s mostly a thing of the past, at least so far as the British Columbia Real Estate Association (BCREA) is concerned.
“The downturn in housing demand induced by the mortgage stress-test is now largely behind us,” says Cameron Muir, BCREA’s Chief Economist, in a statement.
“The BC Housing market is evolving along the same path blazed by Ontario and Alberta, where the initial shock of the mortgage stress-test is already dissipating, leading to increasing home sales,” he explains.
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Sales activity in Ontario’s largest market, the Greater Toronto Area, was up 8 per cent annually in August, and the Toronto Real Estate Board suggests buyers who had moved to the sidelines earlier this year after new lending rules were introduced are once again wading into the market.
As of January 1st this year, more prospective borrowers were subjected to mortgage stress testing as rules drafted by the Office of the Superintendent of Financial Institutions, a federal watchdog, came into effect.
Under Guideline B-20, stress testing was expanded to include uninsured mortgages with downpayments of 20 per cent or more, rather those for which a downpayment of less than 20 per cent was put up.
Flash forward to August, and 6,743 homes changed hands across the province, down 26.4 per cent from a year before, according to BCREA’s most recent Statistical Release.
August’s sales tally was also down from July, when 7,055 sales were recorded through BCREA’s MLS system. However, that month-over-month decline was less dramatic than the fall from June, when transactions totalled 8,837.
However, it’s the seasonally adjusted sales figures that has BCREA noting the impact from mortgage rules has waned, the board’s Chief Economist Cameron Muir confirms in an email.
He notes that on a seasonally adjusted basis August transactions were up 2.5 per cent from July and 3.5 per cent from June.
Despite sales activity remaining far off from levels recorded throughout 2017, the overall resale market has remained relatively balanced. It’s something at least one expert recently attributed to the condo segment, which continues to attract buyers who simply can’t afford any other type of property.
Nonetheless, there are only seven areas of Metro Vancouver, the province’s biggest market by far, where the average household could still afford a condo in August, according to a study.
The province’s sales-to-active listings ratio was 18.4 per cent in August, a number generally in line with a balanced market.
In terms of pricing, BC homes went for an average of $669,776 last month, a decrease of 1.2 per cent from August 2017. Yet year-to-date home prices are up 1.7 per cent compared to the first eight months of the previous year.
By the end of August, $26.4 billion worth of residential real estate had been sold in the province, representing a 13.8-per-cent decrease from the same period last year.