Luxury home prices have dropped
Canadian Real Estate Wealth
The party’s over for now for those sitting on Vancouver’s most expensive properties.
Prices at the top end of the market plunged 7.6% in the six months to March, making it the world’s second-worst performer during that period, according to the latest global survey of prime properties by Knight Frank. Only Stockholm did worse, falling 9%, while Toronto rose 6% and the top gainer was Seoul.
The findings – based on the top 5% of the housing market in each city – lend support to anecdotal evidence of a slowdown in Vancouver’s luxury segment after the hike of a tax on foreign buyers to 20% from 15% in February, the introduction of a speculation tax, and rising interest rates.
Vancouver Mayor Gregor Robertson called the decline “a necessary step” to restoring stability in the local housing market.
“We welcome a more stable period now,” he said in an interview at Bloomberg News headquarters in New York Tuesday. “There’s some concern if values drop and impact homeowners’ equity, but the gains have been so massive for so many years that some softening was to be expected.”
The Pacific Coast city’s slower rate of growth is likely the outcome of British Columbia province’s “macro prudential measures” and the rising borrowing costs for investors, Kate Everett-Allen, Knight Frank’s head of international residential research, said in an emailed response to questions. In Vancouver, the study looked at properties starting at about $3.5m, she said.
Just two years earlier, Vancouver had topped global rankings in the same survey after surging 26% over a 12-month period and before the provincial government first imposed a foreign buyers’ tax in August 2016.
At the height of the market, foreign money had flowed mostly into the million-dollar-plus segment of detached homes, according to Adil Dinani, a realtor with Royal LePage, a unit of Brookfield Real Estate Services Inc.
“Those capital flows have shifted now,” Dinani said. “It’s actually refreshing – you have some time to breathe, to negotiate like a regular transaction.”
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