While national home sales inched higher, B.C.’s Multiple Listings Service (MLS) sales posted another significant decline in March as proposed tax hikes on real estate introduced in the provincial budget further spooked buyers already adjusting to tighter federal lending restrictions. Policies are pushing buyers down market to lower priced multi-family units and curtailing the top end, while adding uncertainty to recreational purchases across the province.
B.C. sales fell 6.6% from February to a seasonally adjusted 6,669 units, with fewer sales observed in most real estate board areas. Year-over-year sales fell nearly 25%, exceeding a national drop of 22.7%.
Compared with average fourth-quarter sales, March sales were down 27% and the lowest since May 2014.
The steepest declines have been in the Lower Mainland, which are down more than 30%.
With the slump in demand reflecting policy changes rather than a slump in the economy, the market has remained firm, albeit cooling from red-hot conditions in 2017. Outside of those speculating for quick gains, there is little urgency on the part of sellers. Resale inventory rose for the first time since October as fewer sales left more units unsold in the market, but levels were in line with levels a year ago and still near a record low.
The provincial average price declined for a fourth straight month to $696,355, down 1.4% from February.
Central 1 expects the sales slide to end in the next two months, with economic growth driving a mild turnaround thereafter. Underlying prices will continue to rise given low inventory but at a slower pace.
Dovetailing with low unemployment and rising wages in recent quarters, the latest job vacancy numbers further underscore just how many jobs are left unfilled in B.C. There were an estimated 88,525 job vacancies in the fourth quarter, up 20% from a year ago and concentrated in retail and food services, technology and health care.
B.C. had the highest job vacancy rate among provinces at 4% and compared with 3.4% a year prior.
Vacancy rates were highest in the Lower Mainland-Southwest (4.3%), Vancouver Island and Coast (3.5%) and Thompson-Okanagan (3.7%).
If businesses want to maintain growth and meet sales targets, further wage hikes and improved non-monetary benefits will be needed. Central 1 forecast wage growth to maintain a 4% growth rate, which will also drive businesses to increase automation in the workplace. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
