Vancouver Property Sales Slow Post-Olympics

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Post-Olympic fever has been unable to sustain British Columbia's over-heated property market, with Vancouver sales down 10 percent in May from a year earlier.

Overall, British Columbia tallied a four percent drop in sales, which analysts say is the first sign of slowdown in the market.

Several factors are impacting sales, experts say, including rising interest rates and inflated prices that bounced back with a vengeance last year.

Even with the slowdown, Vancouver prices are up 19.6 percent from 2009, to CD$669,000 (about $654,000), according to the British Columbia Real Estate Association. Overall, British Columbia prices are up 7 percent from a year ago.

But the market couldn't sustain the flurry of buying in 2009, which was largely driven by buyers who sat on the sidelines for a year.

"We've seen a moderation in demand since the beginning of the year," BCREA chief economist Cameron Muir told the Vancouver Sun. "Home sales in the fourth quarter [of 2009] were trending on record levels and that wasn't sustainable because a lot of the demand was pent up during the recession."

Looking at the other key indicators, British Columbia is clearly in the midst of a transition. While prices are high, the number of homes on the market jumped 26 percent since January, giving buyers a wider selection and reducing the number of bidding wars.

With prices so high and mortgage rates starting to climb, The Canadian Real Estate Association has tweaked its prediction for the next year. Instead of a 13 percent increase in sales, CREA now forecasts 5.5 percent growth and an 8.5 percent decline in 2011, as the market slows.

Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates," Gregory Klump, the group's chief economist, wrote in the report. "Canada will avoid a U.S.-style housing price correction."

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