Vancouver home prices set to rise over 3 years

According to Central 1 Credit Union, home prices will set a new record in 2011, with the median rising 3% from last year to reach $402,000. Prices rose 6% between 2010 and 2011. The forecast said the median will also rise 1% in 2012, then 4% in 2013.

Despite the uptick in sales from last year, the volume will remain below the peak levels seen between 2002 and 2007 said Bryan Yu, the report’s author and an economist for Central 1.

“Low but rising interest rates and tighter mortgage insurance rules will restrict sales for the next few years,” he said.

Population growth in Vancouver, according to the report, will remain positive but begin to slow, falling from 1.6% over the next two years to 1.4% in 2013.

Immigration is expected to continue to rise over this time period, but it won’t be enough to offset interprovincial movement, especially to Alberta, said the report.

The biggest price gains this year will be in the Lower Mainland/Southwest, said the report, with a 4% rise in the median price during 2011 after already coming off a 9% gain last year.

Over the next three years, Cariboo and the North Coast will both see consecutive steady increases in median price, said the report.

Yu said the posted five-year fixed-term mortgage rates will range from an average 5.4% in the first quarter to 5.9% by the end of this year.

In terms of sales, multi-family home sales are expected to lead growth over the forecast period, especially in Metro Vancouver and the Capital region.

“In these regions, apartment condominiums comprise a more substantive component of the market, reflective of their relative affordability compared to single detached homes and proximity to transit hubs and amenities,” said the report.

By next year, there will be a renewed demand in recreational and retirement properties in the province as well, said the report.

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