Vancouver began the year with benchmark home prices falling the most in almost six years, according to the local real estate board. That may be just the tip of the iceberg.

Metro Vancouver’s composite home price, including houses, condominiums and townhouses, fell 4.5 per cent in January from a year earlier to $1.02 million ($780,000 U.S.), the biggest decline since May 2013 and down about 8 per cent from the June 2018 peak, according to the Real Estate Board of Greater Vancouver.

Signs of a correction have been evident for months with transactions slowing and properties lingering unsold. Last year, the sales plunged to the lowest in almost two decades amid a slew of new taxes, rising interest rates, and tighter lending rules.

“Today’s market conditions are largely the result of the mortgage stress test that the federal government imposed at the beginning of last year,” Phil Moore, the realtor group’s president said in a statement Monday.

Vancouver appears to be following a broader trajectory among global cities, including London, Hong Kong and Sydney, that saw massive gains as buyers binged on easy capital during a decade of cheap debt. Now some of that liquidity is drying up. Chinese outbound investment has slumped since a 2016 crackdown on capital outflows, while the U.S. Federal Reserve is shrinking its balance sheet.

“Vancouver real estate was one of the largest benefactors,” of that stimulus, says Steve Saretsky, a Vancouver realtor and author of a local real estate blog. “It may be simple to summarize the slowdown as a few local tax policies and tightening of lending standards, but in reality it’s much more complicated,” says Saretsky, who’s now trying to explain the darkening macro picture in a market where many locals have long considered home price appreciation unstoppable.

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He rattles off troubling indicators, such as the 19.5 months of unsold inventory languishing on the market. The benchmark composite price is a “lagging index” and doesn’t capture the full picture, since detached houses have been falling for nearly two years and are down 12.8 per cent from their peak, says Saretsky.

The top end of the market driven largely by foreign buyers, especially Chinese, has been the hardest hit. Prices in posh West Vancouver have plunged 14 per cent in a year.

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“These homes in West Van were selling for $12 million, $13 million two years ago,” says Adil Dinani, a realtor with Royal LePage, a unit of Brookfield Real Estate Services Inc. “Agents are asking me to throw them off for anything — $8 million, $8.5 million, whatever it is.”

Dinani, who’s been in the business for 14 years, says there are fewer speculative investors, and foreign buyers have really pulled back. “And what local buyer has $6 million, $7 million to put toward a home?” he said.

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