When property in the Lower Mainland area of B.C. was white hot, the province’s capital city, Victoria, started to see a surge in interest. Buyers from the mainland poured into the city with money in their pockets and dreams of a single-family detached home. Now, with the market cooling, sales activity is declining everywhere. In the Greater Victoria Area, July 2018 was the eighth consecutive month for a recorded drop in Victoria home sales, on a year-over-year basis.
Compared to last year, there’s been a 17.6% drop from July, 2017. Measured another way, sales activity was down on a month-to-month basis, with an 8% drop in activity from June to July this year.
“We are in a different market now than what we have seen for the past two years,” explained Victoria Real Estate Board president Kyle Kerr, earlier this week.
Kerr mentioned that there are 3o% fewer sales in the $750,000-or-less bracket than last year. Homes in the $1.5-million-and-higher bracket are increasing in inventory, while also sitting on the market much longer. For instance, in the first seven months of 2017 there were 481 properties listed at $1.5 or higher, compared to 664 this year, which has contributed to the drop in Victoria home sales.
The biggest contributor to the drop in Victoria home sales appears to be the impact of B.C.’s foreign buyer’s tax, which affects the Greater Victoria Area and Nanaimo, as well. For instance, only six properties were sold to foreign buyers this past June, compared to 53 last year. Nanaimo recorded no sales to foreigners in June, compared to 27 in June 2017.
Most industry professionals believe foreign buyers will eventually come back to buy on Vancouver Island, just as non-resident Canadians returned to Greater Vancouver six to eight months after the foreign buyers’ tax was first introduced in August 2016. However, the sales slump isn’t solely because of a lack of foreign buyers. Other contributing factors, such as tighter mortgage regulations and climbing interest rates, are also contributing to the sales slump. This could mean a deceleration of pricing, a flattening of the market or a price correction. Whatever the long-term impact will be most real estate professionals are confident that Greater Victoria’s housing market is stable, even if prices are correcting. It’s a government and healthcare-based city, which means stable, reliable income that’s not going to disappear overnight.