VREB records 740 sold properties in the Greater Victoria region in June 2019, up 4.5 per cent from June 2018, but down 12.7 per cent from May 2019. (File photo)

Real estate spring market ends with a ‘whimper’ in Greater Victoria

Local real estate expert cites federal mortgage stress test as reason for slow market

New figures from the Victoria Real Estate Board (VREB) suggest a stable, but also stagnating market.

VREB records 740 sold properties in the Greater Victoria region in June 2019, up 4.5 per cent from June 2018, but down 12.7 per cent from May 2019.

Cheryl Woolley, VREB’s president, said June sales have trended lower than May sales in years past, signaling the end of the active spring market. “The summer months of July and August generally see less activity than the spring, as people’s attention shifts to vacation and away from real estate,” she said.

RELATED: Greater Victoria real estate sales rose in May 2019 compared to May 2018

Strong sales in May led to the question of whether the market had turned. Writing on househuntvictoria.ca, local real estate expert Leo Spalteholz called the development a “big change” after nearly 28 months of year-over-year sales declines. “Does it mark a turn in the market?” he asked. “Is the correction over already?” Spalteholz did not think so at the time and June figures offer little reason to correct that impression.

“June numbers are out and coming from a more active May, sales were nothing to write home about,” he wrote. In fact, the spring market had ended in Spalteholz’s mind with a “whimper.”

While year-to-year sales rose in June 2019, prices actually dropped by 4.3 per cent from June 2018. The benchmark value for a single family home in the Victoria core area was $898,500 in June 2018. Twelve months later, it had dropped to $859,600.

Figures suggest that buyers should have more choice, as active listings have risen 17.1 per cent from June 2018. But increases in inventory have not helped to bring down prices, with Spalteholz pointing to the federal government’s stress test as a key contributor.

“Note that sales have been essentially flat since the introduction of the stress test,” he said. “Unlike any of the other credit tightening measures that were introduced in the past decade, the stress test has had a large and importantly a long-lasting effect on the market.”

The stress test, in other words, has left many potential buyers on the sidelines, a prospect local industry leaders have acknowledged more than once.

It also comes through again in comments from Woolley, who speculates that some buyers might be waiting for financial help from the federal government.

“It is possible that some buyers are waiting for the federal government’s new first-time home buyer incentive to roll out this September,” she said. “The program is intended to assist first-time buyers with their down payment. It’s hard to estimate how many local buyers may take advantage of the incentive, but because of the low threshold for maximum purchase price, the program may only help those in our area who seek to buy condos.”

RELATED: Real estate sales remain sluggish as prices drop in some parts of Saanich

Looking at specific VREB regions, the Gulf Islands (up 12.2 per cent) and the Malahat area (up 5.68 per cent) recorded the largest price increases. In the Greater Victoria area, only the Westshore recorded a marginal price increase of less than one per cent.

Looking at specific communities, the benchmark price for a single family home in Saanich East stood at $879,400 in June 2019, down from $919,200 in June 2018. The benchmark price for a single family in Saanich West stood at $760,300 in June 2019, down from $764,300 in June 2018. In the City of Victoria, the benchmark price for a single family home stood at $824,300 in June 2019, down from $872,100 in June 2018. In Oak Bay, the benchmark price for a single family home stood at $1.18 million in June 2019, down from $1.29 million in June 2018. In Langford, the benchmark price for a single family home stood at $631,400 in June 2019, down from $633,500 in June 2018.


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