Economic forecast cites 2012 as the bottom of the B.C. housing market, calls for gradual increase in sales and prices over the next three years
Good news for homeowners hoping their property value will go up (and bad news for buyers looking for a deal): a new forecast is calling for moderately higher sales and prices across B.C. for the next three years.
Central 1 Credit Union has increased its provincial pricing outlook, citing stronger population and economic growth. It predicts that the median resale house price in B.C. will end this year up about 1.5 per cent, at $388,000, and will increase steadily to $415,000 by 2016. That’s another 1.5-per-cent increase in 2014, followed by 2.5-per-cent bump in 2015 and three-per-cent hike in 2016.
“We are past the bottom in terms of our housing market correction in the post-recession period,” says Central 1 economist Bryan Yu. The bottom was in 2012, when the number of home sales across the province was 63,798, compared to 71,737 the previous year. Central 1 predicts sales to reach 68,085 in 2013, 72,560 in 2014 and 83,750 in 2016.
While the growth appears significant, Yu says the sales level is moderate when the province’s growing population is taken into consideration. Central 1 forecasts B.C.’s population to increase by about one per cent annually, to reach 4.7 million by 2016. At the same time, it expects the B.C. economy to grow two per cent next year and 3.1 per cent in 2015.
“We see a relatively stable environment going forward in most areas,” says Yu. “There isn’t a catalyst for a substantial drop off in pricing.”
The Central 1 forecast comes amid predictions of a “soft landing” for Canada’s housing market from Bank of Canada governor Stephen Poloz and several national economists. The Vancouver and Toronto markets are closely watched because they are among the biggest and the most expensive in Canada. “If any city is at risk of correcting, it’s pricey Vancouver,” says a recent report from BMO Capital Markets economist Sal Guatieri. It notes the Vancouver market has bounced back from a slowdown earlier this year. “Buyers held the upper hand last year, but the pendulum has swung towards balance today,” Guatieri says.
Central 1 predicts a stronger market for condos and townhomes as increasingly scarce, high-priced detached homes become even more out of reach for many homebuyers. Rental vacancy rates are also predicted to fall in 2015 and 2016, as more people turn to renting over buying. Central 1 expects the provincial vacancy rate to dip to 2.5 per cent in 2014 and down further to about 2.2 per cent by 2016.
According to a Canada Mortgage and Housing Corp. (CMHC) report released December 18, condos made up 35 per cent of the owner-occupied housing stock in Vancouver in 2011, “the highest market share by far” among Canadian cities. Vancouver’s share of condo starts among all housing starts was also highest in 2012 at 64 per cent, compared to 59 per cent in Toronto and 58 per cent in Montreal, according to the CMHC report.