by Marc Pinsonneault, National Bank Financial, Economic Analysis
Summary
ā¢ For various reasons, home sales began declining in Vancouver well before the introduction of a 15% tax on purchases by non-residents and the latest measures announced by the federal government. The latter factors will only accentuate an existing trend.
ā¢ The TeranetāNational Bank House Price Index shows Vancouver home prices essentially flat from August to September after an accelerated rise over the previous seven months. The reason the sharp drop in sales has yet to translate into a price decline is that the resale market remained tight despite the drop in sales.
ā¢ We think Vancouver home prices will soon start correcting. We expect a decline over 12 months of 10% overall and 20% for detached homes.
ā¢ In Toronto, home sales have been setting records month after month while listings have shrunk sharply. The result has been a spectacular acceleration of prices. Sales will eventually cool in response to this rise, as well as to federal government measures and a rise in mortgage rates. But since supply is unusually tight, prices are likely to drop less than in Vancouver. We expect a 3% decline in 2017.
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