(Bloomberg) -- Canadian home sales fell for the fourth-straight month in August, with Vancouver leading the decline after the introduction of a sales tax on foreign buyers.
The number of transactions in Greater Vancouver dropped 18.8 percent from July, and there was a 10 percent fall in the nearby Fraser Valley, the Canadian Real Estate Association said Thursday from Ottawa. The national total fell by 3.1 percent on the month, with the decline blunted by a 2.1 percent gain in Toronto, Canada’s biggest city.
British Columbia’s tax means the western province will contribute to a 4 percent decline in sales next year, the realtor group said in a revised forecast. The 15 percent levy was brought in after an outcry from local families struggling to afford homes that now chew up 90 percent of average before-tax income, and because of warnings from domestic and international policy makers that Vancouver’s housing boom was a threat.
Average Vancouver home prices in Vancouver fell by 18.8 percent on the month, faster than the year-over-year decline of 7.5 percent. In dollar terms, the monthly drop to C$846,244 from C$1.04 million still leaves the city’s prices almost double the national average of C$473,105.
“We expect some of the extreme weakness in August to be reversed in the coming months as the shock of the new land transfer tax on foreign buyers dissipates,” Diana Petramala, an economist at Toronto-Dominion Bank, wrote in a research note. “Nonetheless, we expect the market to remain weak at least through early-2017.”