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Stockholm, Vancouver see huge plunges in luxury property prices
THE party's over for now for those sitting on Vancouver's most expensive properties.
Prices at the top end of the market in the Canadian city plunged 7.6 per cent in the six months to March, making it the world's second-worst performer during that period, according to the latest global survey of prime properties by Knight Frank.
Only Stockholm, the Swedish capital, did worse, falling 9 per cent. Toronto in Canada rose 6 per cent, while the top gainer was the South Korean capital Seoul.
The findings - based on the top 5 per cent of the housing market in each city - lend support to anecdotal evidence of a slowdown in Vancouver's luxury segment after the hike of a tax on foreign buyers to 20 per cent from 15 per cent in February, the introduction of a speculation tax, and rising interest rates.
Vancouver's mayor Gregor Robertson called the decline "a necessary step" to restoring stability in the local housing market.
"We welcome a more stable period now," he said in an interview at Bloomberg News headquarters in New York on Tuesday.
"There's some concern if values drop and impact homeowners' equity, but the gains have been so massive for so many years that some softening was to be expected," he added.
The Pacific Coast city's slower rate of growth is likely the outcome of British Columbia province's "macro prudential measures" and the rising borrowing costs for investors, said Kate Everett-Allen, Knight Frank's head of international residential research.
In Vancouver, the study looked at properties starting at about C$3.5 million (S$3.6 million), she said.
Just two years earlier, Vancouver had topped global rankings in the same survey after surging 26 per cent over a 12-month period and before the provincial government first imposed a foreign buyers' tax in August 2016.
At the height of the market, foreign money had flowed mostly into the million-dollar-plus segment of detached homes, according to Adil Dinani, a realtor with Royal LePage, a unit of Brookfield Real Estate Services.
"Those capital flows have shifted now," Mr Dinani said. "It's actually refreshing - you have some time to breathe, to negotiate like a regular transaction." BLOOMBERG