Home sales in May 2018 across the our real estate board (Okanagan Mainline Real Estate Board) have seen some shifts recently being 28% down from this time last year. With supply starting to catch up to the once extremely high demand. This result is heavily impacted by the government regulations and mortgage rates rising as of late.
This May was the third consecutive month where we had a lower sales volume in comparison to this time last year, with 817 homes sold and new listings up 7% from last year. The average sale price in the region was up only 4% from last year. The government regulations being the biggest reason for this market impact.
With the government sternly focused on affordable housing initiatives, while not doing enough to address the regulatory issues that hamper affordable housing supply in general. It’s difficult to understand how the government initiatives will solves the affordable housing goals, without increasing supply. It’s a very basic and straight forward concept that if you have a high demand and low supply, prices will soar and if you have high supply with not enough demand, you will see the opposite effect take place.
Government initiatives such as the Speculation Tax simply fails to support affordable housing and the intended purpose of this government intervention. A recent UBC study out of Vancouver provides evidence of exactly this, the measure taken by the government fail to lead to affordable housing solutions. The study further goes on to say that in fact more supply is the solution to the issue; and that governments solutions like foreign buyer’s taxes, increase in school taxes and a nonsensical speculation tax are simply not the way to go about it.