Home buyers moving from Vancouver's overheated housing market have upped the number of million dollar home sales in Victoria.
RE/MAX realty's 2016 Spotlight on Luxury report, which reports on trends in the luxury market, reported an unprecedented increase in the sale of homes priced at over $1 million and the trend appears to be continuing. Million-dollar-plus home sales have increased by 82 per cent, year over year while condominium properties in the same price bracket increased by 71 per cent.
Ray Blender, general manager of Re/max Camosun, attributed the increase in luxury property sales to activity in the Vancouver market.
“People in Vancouver suddenly found their homes valued in the several million dollar neighbourhood and they've cashed in. They arrive in the Victoria market looking to buy a home here, and they're coming with a lot of money,” said Blender.
The phenomenon is one of the reasons for the increase in home prices in Victoria, which have seen an increase of 24.1 per cent in the past year. The October 2016 core price for a home in Victoria in October was pegged at $755,000, up from $608,200 for the same time last year.
Another cause for the rise in prices can be found in the low availability of homes for sale in the Victoria region.
“We continue to see low inventory hindering sales in the local market,” said Mike Nugent, president of the Victoria Real Estate Board. “Our numbers are down from the record setting pace set this summer, (but) the market is still moving quickly and is still very compeitive for certain properties.”
The increase in prices in Vancouver had been, in part, attributed to the purchase of homes by foreign buyers who were speculating on the hot housing market. The provincial government stepped in during the summer and, in an effort to put a damper on run away home prices, slapped an extra 15 per cent property tax for properties on foreign buyers. But the same surcharge has not been applied to Victoria.
This prompted fears that foreign speculation would simply move elsewhere, including Victoria.
However, that is not the case said Blender.
“We're not seeing many foreign buyers, certainly nothing like what was seen in Vancouver. For whatever reason, it's not a big factor here yet. The people cashing in on the Vancouver market are, however, really driving the top end of our market,” he said, adding it's not just $1 million property sales increasing in Victoria.
“We're seeing an overall rise in price at the most costly homes,” he said.
“We had nine condos and 72 freehold properties sell over the $2 million mark this year and 15 freehold properties sell at over the $3 million mark.”
The spiraling home prices in Victoria may be impacted by new rules introduced by the federal government regarding the minimum down payments for homes as those buyers requiring mortgage insurance may be able too qualify for significantly smaller mortgages, but Blender points out the new rules have no effect on home buyers from Vancouver coming over with enough equity to make a cash purchase.