The downward trend continues for the Okanagan’s real estate market.
There were 799 residential sales across the region in June, down slightly from May, and 22% lower than this time last year.
Okanagan Mainline Real Estate Board President Marv Beer (pictured) says it’s the fourth straight month of substantial declines.
He says part of it could be a shift to a more balanced market, but he also feels government intervention in the form of new mortgage rules, interest rate hikes, and the speculation tax are also factors.
“In a weird kind of irony, government measures to increase housing affordability are actually having the opposite effect, not just curbing housing demand, but affecting household purchasing power as well,” says Beer, a broker/realty office owner in Salmon Arm. “People aren’t able to qualify for the same amount of mortgage as before, and this, coupled with higher interest rates, means they can afford less, which is likely to be particularly impactful on first time buyers and those at the lower end of the price-range.”
Beer says there are other ways government can enhance housing affordability instead of what he calls the “misnamed and ill-conceived speculation tax,” which he says wouldn’t actually address speculation and would carry the risk of many unforeseen consequences.
“For example, focusing on improving housing supply would aid in addressing a chronic housing shortage plaguing not just the Okanagan but most of BC.”
Supply has struggled to keep up with the Okanagan’s rising population over the past several years, contributing to housing shortages, higher prices and reduced affordability.
While June saw a 22% increase in the inventory of homes for sale over this time last year, inventory continues to be relatively low by historical comparison, with new listings down 5% from May and just 4% over this time last year.
However, new housing units continue to come on stream, with 33 new home developments slated for the Kelowna region alone, including 18 condo, 8 townhouse and 7 single family developments.
“New housing construction should ease some of the pressure on both prospective buyers and renters in the next couple of years, offering much needed supply which, in turn, is likely to contribute to a
flattening of price growth. Some developments, aided by local government incentives and zoning changes, are specifically intended for rental, which should improve current vacancy rates,” says Beer.
Average prices have yet to shift, with June’s average at $547,485, up slightly over May and 7% over this time last year.