In an attempt to head off a U.S.-style housing crisis, the federal government has been tightening lending rules repeatedly over the past few years. The biggest change came in July when the maximum amortization term for government insured mortgages was cut to 25 years from 30.
"There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages," Eugen Klein, REBGV president said.
"This makes homes less affordable for the people of the region."
According to the board, the composite benchmark price for all residential properties in Greater Vancouver is $606,100. That's a decline of 0.8 per cent.
Listings also lower
In addition to sales, listings were also lower. Listings for detached, attached and apartment properties in Greater Vancouver saw a 6.3 per cent decline compared to last September and a 31.6 per cent increase compared to the data from August 2012.
"It is probably the case that prices will lag behind the inventory build-up as the abrupt correction in sales is perhaps followed by discounting," Scotiabank economist Derek Holt said in a note.
The total number of residential property listings on the MLS increased 14.1 per cent from this time last year and increased 4.5 per cent compared to August 2012.
According to Klein, the new numbers put Vancouver in a buyer's market, with the sales-to-active-listings ratio on a decline since March. A report issued Tuesday by the Calgary Real Estate Board shows an opposite trend from Vancouver with an increase in home sales by 14.4 per cent.
Prices holding relatively firm
Holt says divergences like that showcase the extremes in Canada's housing markets.
"With markets in Vancouver and Toronto (up to August, pending September) correcting at an accelerated pace mainly in terms of volumes with so far little change in prices over recent months and in the wake of the July 9th mortgage rule changes, the country clearly needs more ‘Calgaries’ as the month’s total nationwide sales figures arrive," Holt said.
Prices are thus far remaining firm, he notes, but the sales and listings slowdown "risks tripping relatively conservative forecasts for the magnitude of the volume correction," he said.