It was a wild ride for many buyers and sellers in the Victoria market this year. On average, houses in areas close to town (Victoria, Oak Bay and Saanich) saw a nearly 10% increase in property values. The bank of Canada dropped its rates twice in 2015 leading to record breaking low mortgage rates. Since the rates first went down at the end of January, our team has been working at a steady pace to keep up with all buyers and investors that have been driving the market. Throughout 2015 the inventory of homes has been shrinking while the number of buyers has remained high. The vacancy rates are down to less than 1% in some areas because many people have sold their home and are living in a rental. We are predicting this imbalance will shift in the spring when more people start to put their homes on the market to make a move in 2016.
The CMHC report from the end of 2015 explained eleven cities in Canada are showing evidence of being overvalued. Victoria was the only city that has zero signs of overvaluation, overheated market, or over building. You may hear of situations where homes are going for $100-150,000 over their asking price however if you look at the big picture, this is not normal for our entire market. If you’re curious about what your home would sell for, please get in touch with us.
We predict some changes will be coming down the pipeline in 2016 and beyond. We are confident interest rates will go up from where they are today which can cause a decrease in affordability for buyers. This could also curb the enthusiasm of some investors as well. We predicted an increase in the minimum down payment requirements, and this has just been confirmed. Starting in February 2016, to purchase a home over $500,000, buyers will need 10% down on any portion of the purchase price over $500,000.
We suspect the BC property transfer tax may change in the next couple of years. This tax has been the same since it was implemented in the 1980s as a luxury tax (1% on first $200,000, 2% on the balance of a home’s price). The change in rate or threshold price will hopefully reflect its intended purpose and give a break to middle class home buyers.