The Housing Market Feels the Impact of HST
It is not a surprise to many that the implementation of HST in British Columbia this July has affected the Real Estate market.
Even with all the doom and gloom that the media is constantly portraying things are still not that bad. We saw both buyers and sellers trying to complete sales before the HST came into effect at the beginning on the summer which has lead to a slower July than previous years.
As most people now know the HST is not going to impact the purchase price of any re-sale property significantly, unless you are purchasing a new construction home.
I would say it is safe to call our current market a Buyers Market, which means it is a great time for buyers to dive into the market. Interest rates are still very low and we have great inventory all over Greater Vancouver to choose from.
Please see the below article from the National Post for more information on HST and the predicted outlook on the Real Estate Market for the rest of 2010.
As always please don’t hesitate to contact me with any Real Estate questions you may have.
--Morgan DuVernet--
TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
gmarr@nationalpost.com
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