(Adds details from report, background of tax, other factors)
OTTAWA Oct 6 Vancouver's housing market was
already slowing prior to Canada's introduction in August of a
foreign buyers' tax, the federal housing agency said on
Thursday, noting the tax spurred a further drop in the sale of
homes, especially higher priced ones.
The city was already seeing a slower pace of sales, a shift
towards more condominium sales, and a downward trend in average
prices before the 15 percent tax was imposed, the Canada
Mortgage and Housing Corp said in a report on the role of
foreign buyers and foreign capital in Vancouver's market.
The housing agency said while it was too early to determine
the long-term impact of the tax, which was opposed by realtors
and developers, preliminary analysis of August and September
resale data suggested the "policy shock" consolidated a slowing
trend in the market that was already underway.
"Sales and prices had started to dip before the
introduction of the Foreign Buyers Tax, so it basically
underlined existing trends in the resale market," said Robyn
Adamache, principal of market analysis at the CMHC.
The average price dropped 17 percent in August from July,
partly due to a change in the mix of homes sold away from the
higher end of the market, the CMHC report said.
Canadian policymakers have moved several times to cool the
nation's hot housing market, including by tightening mortgage
rules, but the foreign buyers' tax was aimed specifically at
Vancouver, where foreign money was blamed for driving up prices
beyond the reach of local residents.
Vancouver sales fell in the two months following the
province's move to impose the tax, while Toronto sales and
prices continued to soar, which some attributed to foreign
buyers moving from Vancouver to Toronto.
The CMHC report said foreign money was only one factor
driving Vancouver's housing market, and the extent to which
foreign buyers have impacted house prices was still "unclear and
It said high net worth individuals with lots of home equity,
as well as population and job growth, low mortgage rates, and
low levels of listings have helped drive sales and prices in the
(Reporting by Andrea Hopkins; Editing by Bernadette Baum)