A chief North American Economist says the foreign buyer’s tax isn’t the reason for the 26 per cent decline in Metro Vancouver home sales last month.
There may be other factors that explain why the region has seen a slump.
In a report by Paul Ashworth of Global Economics, it says media failed to report homes sales were down by 27 per cent in July year over year.
And since February, Metro Vancouver’s market has seen a downward trend, proving the foreign levy has made no impact to drive the housing bubble.
UBC Economist Tom Davidoff agrees.
“China is making it harder and harder to get money out, and of course the loonie weakened, it may well have been part of the decline in our market, he’s correct. We hit a peak in transactions prior to the summer.”
The report says irresponsible lending and rising domestic debt are also to blame for the steep decline in sales.
But CKNW Business Analyst Michael Levy disagrees with the report – he says irresponsible lending by banks has nothing to do with the drop in sales.
“The bank is reacting to what interest rates are and interest rates in Canada are at historical lows and mortgage rates are based on interest rates. They are towing the line as far as CHMC is concerned. Certainly there was a lot of activity because of low interest rates, but not irresponsible lending.”
Levy also says ‘lack of affordability’ is why the local market has seen a downward trend since last February.