Vancouver home sales plummet, mortgage stress test rule blamed

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      The Real Estate Board of Greater Vancouver is reporting another painful month for the housing market.

      According to the REBGV, 1,829 homes were sold in April 2019, representing a 29.1 percent decrease from the number recorded in the same month last year.

      That’s 43.1 percent below the 10-year sales average for the month of April, the REBGV indicated.

      There are also more house listings than previously seen since October 2014.

      However, last month’s sales improved compared to March 2019.

      The REBGV reported that April 2019 sales were 5.9 percent higher than March.

      “Government policy continues to hinder home sale activity,” association president Ashley Smith said in a media release.

      Ashley was referring to mortgage stress test or the "B-20" rule.

      Introduced in January 2018 by the federal Office of the Superintendent of Financial Institutions in response, the regulation requires homebuyers to qualify for a rate that is two percent higher than the contracted rate.

      “The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing,” Smith said. “Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand.”

      The REBGV covers Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

      In its report Thursday (May 2), the association noted that the composite benchmark price for all residential properties in April was $1,008,400.

      According to the REBGV, this number represents an 8.5 percent decrease over April 2018, and a slight 0.3 percent decrease from March 2019.

      The association also stated that there are more listings in the market.

      In April this year, a total of 14,357 homes were listed for sale, a 46.2 percent increase compared to April 2018, and a 12.4 percent increase from March 2019.

      “There are more homes for sale in our market today than we’ve seen since October 2014. This trend is more about reduced demand than increased supply,” Smith said. “The number of new listings coming on the market each month are consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.”