(Black Press Media files)

Rate hike could ‘compound’ slowdown of B.C real housing market: realtor

Rate increase will likely mean buyers take a more cautious approach

The Bank of Canada rate hike announced earlier Wednesday morning could continue to slow down the B.C. real estate market, according Royal LePage West Real Estate Services.

In a statement, the bank said the 0.25 per cent increase to a 1.75 per cent rate was in response to the recently signed trade deal between Canada, the U.S. and Mexico.

Adil Dinani, a realtor with Royal LePage, said although the rate hike meant the Canadian economy was moving in a positive direction, it could temper the B.C. real estate market.

“This is a marginal increase, but if you look at the past 12 months, we’ve seen rates move up over one per cent,” said Dinani.

“This does create some challenges on behalf of borrowers, [both] to get approved and to manage those increasing borrowing costs.”

Dinani said that the rate hike will likely have “compounding effect” on the housing market slowdown already caused by new mortgage rules and the anticipation of the NDP’s speculation tax.

The latest figures from the B.C. Real Estate Association show that residential sales were down by 33 per cent this September, compared to the same month last year.

In Greater Vancouver, sales dropped by 43 per cent and the South Okanagan saw a decrease of 49 per cent.

“They’re all leading towards a cooler housing market in Vancouver,” said Dinani.

“When you have a plethora of policy changes being thrown at any market, buyers take more of a cautious approach.”

Dinani cautioned that although a drop in the housing market may seem strange after a decade of near-constant growth, it is a normal feature of a cyclical sector.

“It’s normal for markets to have corrections and adjustments,” he said.

“These corrections are normal, natural and I would say healthy for the long-term sustainability of the market.”

READ MORE: Startup offers $1 way into B.C. real estate

In places like Greater Vancouver sales have dropped by more than 40 per cent compared to this time last year, but Dinani doesn’t foresee a crash.

“The narrative of why everyone was buying is still very much intact: the desirability of living in Vancouver, the political and fiscal climates are all very positive,” he said.

“I think we’re still going to see the demand from people that are migrating here.”

Dinani said most of the effect will be concentrated on those still looking to buy into the housing market, rather than those with mortgages.

“A lot of clients are on five-year fixed mortgages so this increase doesn’t impact them whatsoever,” he said.

“The group that it does impact are the group that took on variable mortgages… those folks will be marginally impacted on a monthly basis.”


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

HousingReal estate

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

City of Fernie introduces shipping container restrictions

Containers are prohibited on residential properties except in very specific instances

Outdoor facilities reopen in the Elk Valley

Select parks, outdoor playgrounds, and public washrooms reopen for public use

Elk Valley municipalities send out 2020 property taxes

2020 property tax payments, annual utility payments, and homeowner grant applications are due July 2

ERA seeks to enhance local wetlands

The ERA proposed a new project at the lastest Committee of the Whole meeting

Pay guarantee removed for some Kootenay on-call paramedics

Guarantee phased out as BCEHS introduces a new “scheduled on call” model

VIDEO: B.C. dentist gets grand welcome home after two months in hospital fighting COVID-19

Michael Chow was given a surprise send off by hospital staff and ‘welcome home’ from neighbours

‘Like finding a needle in a haystack’: Ancient arrowhead discovered near Williams Lake

The artifact is believed to be from the Nesikip period between 7,500 BP to 6,000 BP

Indigenous families say their loved ones’ deaths in custody are part of pattern

Nora Martin joins other Indigenous families in calling for a significant shift in policing

Friends, family mourn Salt Spring Island woman killed in suspected murder-suicide

A GoFundMe campaign has been launched for Jennifer Quesnel’s three sons

PHOTOS: Anti-racism protesters gather in communities across B.C.

More protests are expected through the weekend

Indigenous chief alleges RCMP beat him during arrest that began over expired licence plate

Athabasca Chipewyan Chief Allan Adam calling for independent investigation

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

UPDATED: Pair accused of ‘horrific’ assault at Vancouver’s Oppenheimer Park arrested

Police say Jason Tapp, 30, and Nicole Edwards, 33, did not show up to meet their bail supervisor this week

Most Read