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In January 2016, Vancouver quickly became one of the hottest real estate markets in the world as a result of a flood of Chinese “hot money” into Vancouver. The Vancouver real estate market later proved to be the biggest real estate bubble in Canadian history. Over time, horror stories about the real estate bubble are beginning to unfold. As Bloomberg reported, buyers showed up in Vancouver throughout the winter to join the bidding war, and home sales in Vancouver hit an all-time high.
Last week, the Greater Vancouver Real Estate Bureau (Real Estate Board of Greater Vancouver) reported that the volume of real estate transactions in the Greater Vancouver area fell 40 per cent year on year in January 2017 because buyers and sellers were not sure whether the recent rise in house prices would continue and the market was worried that the real estate bubble had burst. It is 11.1% lower than in December 2016.
This is the seventh month in a row that the volume of real estate transactions in Vancouver has fallen, and the volume of real estate transactions in Vancouver in January 2017 was 10.3% lower than its 10-year average in January. The transaction-to-listing ratio in Vancouver fell to a two-year low in January 2017, according to the Greater Vancouver Real Estate Bureau. The real estate industry regards the transaction-to-listing ratio as a sign of price.
Although the volume of housing transactions in Vancouver has fallen sharply, there has been no substantial adjustment in real estate prices, with benchmark home prices in Vancouver rising 15.6% year-on-year in January 2017. The average benchmark sale price of a single-family detached house in the greater Vancouver area rose 15.8% year-on-year to C $1.4748 million. The decline in housing transactions has hit the single-family detached house market the hardest. At this time last year, the prices of single-family houses rose by double digits. Single-family house prices have fallen 6.6 per cent in the past six months, hovering around C $1.47 million (US $1.13 million), down 0.6 per cent from December 2016.
Vancouver tops a list of risks of a global urban real estate bubble compiled by UBS. Predictions of a downturn in Canada’s highest-priced real estate market seem to be coming true after Canada began imposing a 15 per cent property tax on foreign buyers in August and the federal government tightened mortgage rules in October. Royal LePage last month predicted that home prices in the greater Vancouver area would fall 8.5 per cent this year.