VICTORIA — Greater Vancouver’s real-estate prices continue to climb out of reach of most ordinary families, but the province’s new measures to tackle housing affordability may have an impact on the market, according to a new report by credit-rating agency DBRS.
The DBRS fourth-quarter, Canadian-housing-indicators report, released Monday, said the average resale price in what it deemed the Greater Vancouver Area (GVA) was up six per cent from last year, and has largely recovered from an almost 18-per-cent fall after the B.C. government introduced the foreign-buyer’s tax in 2016.
“Similarly, sales volume in the GVA had been recovering but is still below the levels seen before the introduction of the foreign-buyers tax,” read the report. “Geographical expansion of the levy, the increase in the tax rate and the additional speculation tax to be introduced in fall 2018 could have further implications on market stabilization going forward.”
Premier John Horgan’s new speculation tax is part of a suite of reforms his government has said it hopes will cool the real-estate market, reduce foreign investment that results in empty suites and increase the province’s rental stock. However, critics have warned that the government has merely increased uncertainty with unclear tax changes that may have unintended consequences.
The DBRS report noted that homeowners in Greater Vancouver and the Greater Toronto Area remain the most highly indebted in Canada, due to the speed in which their real-estate markets have expanded. “The surge in home prices has made it hard for an average family to qualify for an insured mortgage, particularly in Vancouver and Toronto,” DBRS said.
Other measures designed to either cool the housing market include the Bank of Canada raising key interest rates, Ontario’s Fair Housing Plan and a new mortgage stress test by Ottawa for insured mortgages. Uninsured mortgages remain even more expensive.
“DBRS estimates that an average household would need an estimated 53-per-cent down payment for a detached home, 37 per cent for a semi-detached home or 26 per cent for a townhouse in order to qualify for an uninsured mortgage under the new qualifying rates,” read the report.
The report says the average Canadian household had an estimated net worth of $751,709, including $280,849 in home equity. The average Canadian housing price is $513,000, said the DBRS.
The average B.C. real-estate price was $748,327 in 2017, and in Metro Vancouver it was $1.09 million in the first quarter of 2018, according to the B.C. Real Estate Association.
The DBRS is one of the province’s key rating agencies for the provincial budget, and most recently reconfirmed the province’s AA (high) credit rating.
Source: The Vancouver Sun. http://vancouversun.com/news/politics/vancouver-real-estate-prices-still-climbing-but-tax-changes-could-have-impact-report-says