(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.

Just Posted

UPDATE: Mattress fire at Cowichan Hospital under investigation

The Cowichan District Hospital was locked down on Tuesday afternoon due to… Continue reading

VIDEO: Cowichan Secondary starts two-week run of ‘The Addams Family’ Jan. 16

The Cow High cast is ready, the stage is set: all they need is you so make tracks to see this show

Cowichan Church wants stolen banner returned

Banner stolen from intersection on Jan. 10

UK lawmakers reject Brexit deal in 432-202 vote

House of Commons votes against the deal struck between Britain’s government and the EU

Millennial Money: Don’t let Instagram envy get you into debt

A full 48 per cent of U.S. households have credit card debt

Jury debates fate of man accused of killing 12-year-old B.C. girl 40 years ago

Police allege Garry Handlen told a cop how he abducted, sexually assaulted and strangled Monica Jack in May 1978

Letters on way to all homeowners in B.C. speculation tax communities

Property owners have to register to avoid vacant-home tax

New orca calf in Salish Sea ‘healthy and active’

Birth cause for celebration but things still dire genetically, expert says

UPDATE: One person confirmed dead in Port Alberni motor vehicle accident

Rural residential road remains closed as RCMP, coroner investigate

Good Samaritan rescues cat found in heaps of garbage at B.C. landfill

The cat was abandoned and left to die at the Foothills Boulevard Regional Landfill, the BC SPCA says

Vancouver, Victoria, Kelowna home to Canada’s most expensive rentals: report

According to PadMapper, units in larger B.C. cities cost $1,300 to more than $3,000

Most Read