New real estate numbers show sales in Greater Victoria have slowed down in January 2018, but the long-term direction appears uncertain at this stage. Black Press File

Real estate sales in Greater Victoria almost down 10 per cent

New figures that show lower real estate sales could be a sign of things to come.

That is the message from local industry leaders after the release of figures that show real estate sales dropped nearly 10 per cent.

Kyle Kerr, president of the Victoria Real Estate Board (VREB), said the figures met expectations.

“We expected January to be a bit slower after the increase in activity we saw in November and December, which was likely due in part to buyers entering the market early to avoid the new mortgage stress test,” he said.

The full effect of the new rules designed to curb real estate speculation will not fully appear later, he added. “We won’t know how much that stress test will affect the spring market until we see the numbers, and spring is also the time when sales traditionally pick up.

Looking closer, statistics show rising prices against the backdrop of low inventory. Figures show 1,491 active listings in the Greater Victoria region — up 7.7 per cent from December 2017, but close to two recent historic low points in December 2016 and January 2017.

This “lack of inventory” as described by VREB has in turned maintained pressure on prices. The benchmark value for a single family home in the Victoria Core (which includes Saanich) was $831,900 in January 2018 — up 9.3 per cent from $761,100 in January 2017.

“We can also see the effects of headwinds influencing our market in 2018, including attempts to curb demand at all levels of government,” said Kerr. “The mortgage stress test is the latest to be introduced, and we may learn of further measures later this month when the provincial budget is released.”

January’s numbers have received a good deal of scrutiny and commentary, as a would-be seismograph of the new mortgage rules and other potential political developments that might impact the real estate industry, an important sector of not just Victoria’s economy, but also the provincial economy-at-large. Ottawa, for example, has expressed concerns about Canadians’ debt-load, while the provincial government has been considering various measures to improve housing affordability, as well as curb illegal activities involving real estate.

Sales through the first two weeks of 2018 were down significantly compared to the same period the year before with commentators such as Leo Spalteholtz of househuntvictoria.ca pointing to the new mortgage rules. Then sales took off through the third week of January in leading towards the final figures, which Spalteholtz says actually reflect a market of “contradictions.”

“There are just as many single family homes selling now as last year, but they are taking nearly twice as long to sell (31 days). Meanwhile condo sales are down by a quarter, inventory is up, but they are selling twice as fast as last year (8 days),” he said.

Speaking with the Saanich News just days before the end of the month, Kimberly Legeard of New Port Realty, meanwhile, thinks that the stress test has had a negative effect.

“What we are seeing is a lot of challenge around the mortgage test,” she said. With prices high already, it has impacted people’s purchasing power, she said. Meanwhile, would-be sellers in Victoria might be hesitating to put their properties on the market because they might not find another place to live, she said.

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