BC’s property market continued to slow in October per official numbers released by the BC Real Estate Association. October sales fell 26.2% year over year while inventory increased by nearly 30%. The continued slowdown brings year-to-date residential sales lower by 22.8% compared to the same period last year, while dollar volumes slipped by 22.1% to $49.7 billion.
The slowdown can certainly be attributed to a bout of tighter lending conditions, including a mortgage stress test and higher interest rates, both of which have pushed mortgage credit growth to an eighteen year low. However, it appears foreign buyers have also retreated.
Year to date foreign buying activity has accounted for $2.2B worth of residential home purchases, a drop of 28.5% from the same period last year.
The Dollar volume decline was even steeper in October, sinking 36% year over year. Per BC Government land transfer data, foreign buyers accounted for just under 3% of all transactions, little changed from a year ago.
As a result, tax revenues from the foreign buyers tax have also been declining. Year to date foreign buyer tax revenue fell by 19% to $144 million.
The BC Government is hopeful the recent shortfall will be offset by the Speculation and empty homes tax which was just passed through legislature. Whether it does or not, BC’s Finance minister Carole James calls the move “an important step forward that will curb foreign ownership, tackle speculation and return empty homes to the housing market for British Columbians to actually live in. The last government looked the other way as the housing crisis spiralled out of control and an entire generation was priced out of the housing market. Today marks a change in direction. The era in which government turned a blind eye to speculators, foreign owners and satellite families taking advantage of an overheated housing market is over. It won’t be easy, but we will rein in the out-of-control housing market.”