Don’t panic. That is the message from Victoria Real Estate Board (VREB) president Ara Balabanian in an interview with Saanich News after new figures showed that property sales in August dropped nearly 17 per cent compared to the same period last year.
“The numbers we are seeing are far from being low compared to the long term,” he said.
While the benchmark price for a single home in Victoria dropped 1.3 per cent in August compared to July, the benchmark value for the same home in August 2017 was 10.8 per cent higher than compared to August 2016.
So prices dropped slightly, but remain at a high plateau. In fact, some housing types actually countered the regional decline. Condominiums across the region and single family homes in North Saanich have increased in benchmark value by almost one per cent.
Sale figures also dropped in July. August’s decline does not signal a significant change in property values across the region, said Balabanian. After years of strong growth, such minor fluctuations appear inevitable and real estate remains a good long-term investment, with the emphasis on long-term, he said.
“For me, real estate is a long game,” he said.
Balabanian made these comments against the backdrop of larger economic developments that included a hike in interest rates, the second this year.
Canada’s overnight interest rate is now one per cent. The rate determines the lending rate on mortgages among other financial instruments. Balabanian said the interest rate hike is not good news for first-time home buyers. But he also added that interest rates remain at historically low levels.
He also tried to ease concerns that the interest rate hike was a harbinger of a popping housing bubble that could trigger a massive economic downturn.
Victoria’s economic profile as the provincial capital, popular tourism destination and emerging high-tech sector promises to temper any negative development, he said.
“I’m not saying that world is going to fall apart,” he said. “But we are less susceptible to sudden changes in the global economy.”
Overall, the VREB recorded 1,917 active listings for August 2017, a drop of four properties compared to July. Compared to August 2016, the number of listings dropped 8.5 per cent from 2,094 active listings.
Notably, Balabanian said the number of listing surprised him. “I expected inventory numbers to be climbing by now, but instead we’ve seen even lower number of listings on the market. This is likely leading to some buyer fatigue along with pressure on pricing high-demand areas.”
Would-be sellers, in other words, are staying put. That is not to say though that they have lost confidence in the strength of the market, said Balabanian. In some cases, they are struggling to find other homes.