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Could This Be The Vancouver Housing Market's Last Hurrah?

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VANCOUVER SKYLINE SUNSET
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Written by Wayne Karl

Next to Vancouver-area markets, do you think Toronto is leading home price growth in Canada? In Ontario?

Nope. Try Oshawa.

Based on the latest Royal LePage House Price Survey for the third quarter of 2016, B.C. markets dominate the top five. The usual suspects of Vancouver, West Vancouver and North Vancouver are right up there, but Richmond and Coquitlam are also showing strong double-digit increases of 34.3 and 26.4 per cent, respectively, year-over-year.

And in Ontario, Toronto is still posting strong gains, but Oshawa, at 26 per cent, and Richmond Hill, at 25.7 per cent, are far outpacing Toronto's 12.1-per-cent growth.

B.C.'s new 15-per-cent property transfer surtax on foreign nationals and foreign-controlled corporations, introduced early in the quarter, is causing sales to slow, but is having little impact on Greater Vancouver home prices, which led the country with 30.6 per cent appreciation year-over-year. Ontario, which is said to be considering a similar tax, saw house price increases in the GTA of 13.6 per cent.

Overall for Canada, the Royal LePage National House Price Composite shows that the price of a home increased 12 per cent year-over-year to $545,414 in the third quarter of 2016. The price of a two-storey home rose 13.7 per cent to $649,635, bungalows increased 11 per cent to $459,481 and condominiums 5.8 per cent to $360,679.

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"In what may be a final hurrah for this expansionary cycle, Greater Vancouver posted another quarter of unsustainably high price appreciation," says Phil Soper, president and chief executive officer, Royal LePage. "The median value of homes in the tiny West Vancouver suburb increased by nearly 40 per cent -- or an astonishing million dollars -- year-over-year. That said, relief appears to be on the way. For months, the number of homes trading hands has been slowing on eroding affordability. And, slower sales volumes lead to moderating prices."

Nationally, real estate markets remain healthy, with home values showing modest to strong price appreciation in almost every Canadian city.

"Even in the hardest hit oil patch regions, prices have held up well, with small single-digit declines, year-over-year," says Soper.

New measures introduced by the federal finance ministry on October 3, designed to cool the housing market primarily by curtailing foreign buying activity, have led to a decline in sales in Vancouver.

"Consumer confidence suffered a direct hit when the federal government introduced new, more restrictive regulations in early October," says Soper. "While it is too early to say definitively, it appears Canadian homebuyers are adjusting quickly, and that fears of a hard correction were unwarranted. While the changes are significant, major lenders may already be using similar criteria when writing mortgages in sensitive regions like Alberta and BC, so the additional drag on the market resulting from the new legislation won't be as great as it appears on the surface."

Vancouver continues to attract foreign interest, he says, and capital is not expected to automatically migrate to Toronto as a result of the new tax in B.C.

"It is important to remember that most people buy houses for the location, lifestyle and family needs, and not simply upon financial investment criteria," says Soper.

Post originally published at YPNextHome.ca

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