A Vancouver real estate and property tax expert believes Vancouver’s real estate market is seeing the start of a downturn that could last up to two years.
The comments come after a prediction from the Royal Bank of Canada that the country, B.C. and Ontario in particular, will see big price drops next year.
"We expect downward price pressure to be more intense in Vancouver, Toronto and other pricey markets," assistant chief economist Robert Hogue wrote in RBC's latest housing outlook.
"By comparison, we expect activity and prices to be more resilient in Alberta, where local markets have more catching up to do following a prolonged slump before the pandemic."
British Columbia's aggregate price is expected to dip 3.8 per cent in 2023, down to about $1.02 million. That's the biggest drop forecast across the country, ahead of the 2.3 per cent decrease anticipated in Ontario.
Paul Sullivan is a B.C. property tax expert and Ryan LLC principal who leads the Business Tax Alliance, a partnership with B.C. Business Improvement Associations. He said the market is changing in an almost perfect storm of circumstances.
“You couldn’t have much worse going on in the world - you got war, we got interest rates, we have a supply chain crisis,” Sullivan said. “It’s kind of set up for a pretty bad scenario.”
Sullivan said even though the price of housing is coming down, it won’t help affordability. Record high inflation and interest rate increases mean buyers can afford less, and it’s getting harder to build.
“We have incredibly high pricing on materials with all the transportation issues and we have a labour shortage,” he said. “The price of delivering new homes to the market is going through the roof right now.”
The RBC forecast predicts “prices peaking this spring as market sentiment sours” then coming down.
“I would disagree with that comment,” Sullivan said. “I think prices spiked already in the last quarter or even end of last year. The demand level has already come down and interest rates are going to exacerbate that.”
As for how long the downturn will last, Sullivan said Vancouver typically has short real estate cycles but believes this time, it will last longer.
“I think values are going to go down for longer than 6 or 12 months this time - we’re going to be in a downtick for maybe as long as two years,” he said.
With files from CTV News Vancouver's Andrew Weichel
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