Even before the new tax took effect Aug. 2, Vancouver’s existing home market appeared to be pulling back based on July sales.

The Real Estate Board of Greater Vancouver said Wednesday that there were 3,226 sales in July, down 18.9% from a year earlier and 26.7% from June.

However, prices continued to climb at about the same pace. The MLS Home Price Index composite benchmark price for all residential properties was up 32.6% from a year ago to $930,400. June’s index price was $917,800, up 32.1% from a year ago.

“After several months of record-breaking sales activity, home buyer demand returned to more historically normal levels in July,” said Dan Morrison, president of the board, in a release. July home sales were below 4,000 for the first time since January but still 6.5% above the 10-year average for the month.

“Home sale activity showed some moderating signs in late June and this carried into July,” Morrison said. “We’ll wait and watch over the next few months to see if this marks the return of more normal market trends.”

It is still unclear what impact a new provincial tax law, requiring an additional 15 per cent property tax transfer fee from foreign buyers on property sales in Metro Vancouver, will have on the market. Realtors reported scrambling to close deals last week before the tax took effect and on Wednesday they reported transactions falling apart as overseas buyers walked away from deposits with the tax now in play.

Supply is starting to heat up in with new listings for detached, attached and apartment properties reaching 5,241 in July, a 2.5% increase from a year ago but a 10.8% decrease from June.

The total number of properties listed for sale on the MLS system in Metro Vancouver was 8,351 at the end of July, a 27.4% decline compared to a year ago and a 6.9% increase from June 2016.

The sales-to-active listings ratio for July was 38.6%. “Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12% mark, while home prices experience upward pressure when it reaches the 20 to 22 per cent range in a particular community for a sustained period of time,” said the board.

Detached property sales dropped 30.9 in July from a year ago but the benchmark price for detached properties increased 38% from during the period to $1,578,300.

Sales of apartment properties fell 7.3% in July compared to a year ago while the benchmark price of an apartment property increased 27.4% during the same period.

Vancouver Housing Market Easing Up From Its Record Pace, Despite New BC Tax Law by Garry Marr | Financial Post