Half the money circulating through Vancouver’s housing market has vanished in the past year, causing a steep drop in sales, now followed by a decline in prices. The average resale price in Greater Vancouver was $878,242 in January, down 18.9 per cent from a year earlier, when it stood at $1.038 million, according to numbers from the Canadian Real Estate Association.

An aerial shot of downtown Vancouver, with the north shore mountains in the background. Greater Vancouver has seen an 18.9-per-cent drop in the average house price over the past year. A price drop that large can be caused by two things: Sellers reducing their asking prices.

A steep drop in top-end home sales, changing the mix of home sales. In Vancouver today, it’s likely both. Many observers of the Vancouver market say they are seeing price reductions, particularly among single-family homes. Vancouver’s decline has been led by a slump in high-end home sales, which peaked in February of last year and have declined significantly since then. Evidence suggests that, though the decline began before B.C. introduced a foreign buyer tax last August, the tax had an immediate depressing effect on home sales.