Existing policies and market conditions in BC prevent many buyers and sellers from fully participating in the market, according to Vancouver’s Central 1 Credit Union.
The firm found that home sales in the province decreased by a massive 40% since the end of 2018. Currently, hopeful buyers are hesitating due to high price levels, while potential sellers would rather wait on the sidelines for a market recovery.
Stricter federal and provincial regulations were cited to be major factors slowing down activity, the analysis noted. Among the most damaging of these policies were B-20 (which weakened purchasing power by 20%) and BC’s 20% foreign buyer tax (which forced capital holders to invest elsewhere).
Even BC’s likely robust economic performance this year will not be able to offset these weaknesses, Central 1 deputy chief economist Bryan Yu said. Residential sales are estimated to further decrease by 11% in 2019.
And the actual situation this year might even be worse: Yu cautioned that the analysis did not take into account the possible effects of money laundering.
“These were model-driven numbers based on international numbers and I would say very little localized information,” Yu told The Canadian Press. “It seems to me we’re really still searching for those numbers and trying to get a better grasp of them.”
The results of a government report released last month indicated that dirty money inflated BC residential property prices by approximately 5% last year. Finance Minister Carole James also stated that money laundering could have “distorted” the Metro Vancouver housing market by as much as 20%.
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