The residential housing sales picture for June across the Okanagan Mainline Real Estate Board region from Revelstoke to Peachland continued to decline.
Sales for the region were done 22 per cent over June 2017, the fourth consecutive month in 2018 where sales have dropped from the same period the previous year.
“This is the fourth consecutive month where sales volumes are substantially down from the same period last year,” comments OMREB President Marv Beer.
OMREB president Marv Beer noted that after the highs of the last few years, a shift towards a more balanced market is a natural and welcome progression.
He noted the current downward correction may be somewhat amplified by government intervention on several fronts—new mortgage rules, interest rate hikes and the spectre of a speculation tax that could impact Kelowna and West Kelowna.
“In a weird kind of irony, government measures to increase housing affordability are actually having the opposite effect, not just curbing housing demand, but affecting household purchasing power as well,” said Beer.
“People aren’t able to qualify for the same amount of mortgage as before, and this, coupled with higher interest rates, means they can afford less, which is likely to be particularly impactful on first-time buyers and those at the lower end of the price-range.”
Federal government intervention layered onto a softening market is already having the effect of dampening demand, Beer noted, indicating there doesn’t appear to be a need for a further check on demand via the provincial government’s proposed speculation tax.
Beer contends that there are other ways government can enhance housing affordability, such as focusing on improving housing supply. Members of the public wishing to express concerns about the proposed speculation tax to the B.C. government can do so via the scrapthespeculationtax.ca website.
Beer explained the supply has struggled to keep up with the Okanagan’s rising population over the past several years, contributing to housing shortages, higher prices and reduced affordability. While June saw a 22 per cent increase in the inventory of homes for sale over this time last year, inventory continues to be relatively low by historical comparison, with new listings down five per cent from May and just four per cent over this time last year.
However, new housing units continue to come on stream, with 33 new home developments slated for the Kelowna region alone, including 18 condo, eight townhouse and seven single-family developments.
“New housing construction should ease some of the pressure on both prospective buyers and renters in the next couple of years, offering much needed supply which, in turn, is likely to contribute to a flattening of price growth. Some developments, aided by local government incentives and zoning changes, are specifically intended for rental, which should improve current vacancy rates,” said Beer.
Average prices have yet to shift, with June’s average at $547,485, up slightly over May and seven per cent over this time last year.
“Price is typically one of the last indicators to shift, as sellers adjust to changing conditions associated with a normalizing market,” added Beer.
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