TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
© Copyright (c) National Post
Showing posts with label HST Ontario. Show all posts
Showing posts with label HST Ontario. Show all posts
Monday, August 16, 2010
Monday, August 9, 2010
Misconceptions about HST slowing home sales: poll
Realtors say the new tax -- which does not apply to the purchase price of resale homes -- is a bigger threat than rising interest rates
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
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