B.C. housing sales to slow, prices to rise
December 9, 2017
With a record amount of new homes under construction, British Columbia’s white-hot housing market is expected to cool next year according to the largest real estate group in the province.
The BC Real Estate Association’s fourth quarter Housing Forecast, said B.C.’s economy is projected to slow to a rate of 2.8 per cent in 2018, down from the expected 3.8 per cent growth rate this year.
BCREA’s chief economist Cameron Muir says there are several reasons for the predicted dip in housing sales.
“In 2018, there are going to be some headwinds in the housing market, primarily some higher interest rates, also tighter mortgage qualifications applying a stress test to conventional mortgages,” Muir said.
Muir adds that higher prices, especially in Metro Vancouver, will affect demand.
“Going forward we’re faced with a much higher price level and that’s going to exacerbate the impact of a rising interest rate environment and tighter mortgage qualifications overall,” said Muir.
Housing sales are expected to reach 102,350 units by the end of 2017, down roughly 9 per cent from a record 112,200 sales in 2016. However, 2018 sales are projected to drop a further 10 per cent to 91,750 units.
“We’ve had four consecutive years above 3 per cent real GDP growth that’s induced a lot of employment, also migrant activity moving from other provinces to B.C.,” Muir said.
B.C. has a record high number of 56,000 new homes under construction, mostly condominiums and townhouses, many of which will complete in 2018.
Next year, the average price of a home in the province is slated to increase 4.6 per cent to $745,300 from an expected $712,300 this year.