The weak performance of the BC housing market in 2018 is set to continue in the new year, although sales should start to tick higher over the coming two years.
A housing market report from Central 1 Credit Union calls for resale home transactions to decline 17% in 2018 to 81,465 units with large urban markets suffering the sharpest declines.
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“The federal government’s ‘stress tests’ cut potential buyers’ purchasing power, which in turn, has severely affected home sales. Further dampening demand have been higher mortgage rates and various provincial policy measures,” commented Brian Yu, Central 1’s deputy chief economist.
With the median resale price in BC expected to dip 2% to $520,000 in 2018, Yu says the days of rapid escalation are over.
“Sales in B.C.’s combined metro markets of Vancouver, Abbottsford-Mission, Kelowna and Victoria are down 40% compared to the end of 2017, led by the Lower Mainland markets.” This reflects higher price levels in these areas and down payment constraints,” added Yu.
However, sales should edge 0.6% in 2019 to 81,990 units and 4% in 2020 to 85,110 units.
Starts to slip further
Urban starts have dropped sharply, trending at about 31,000 annualized units since September compared to 40,000 units for the first eight of 2018.
“We predict B.C.’s housing starts will fall to about 32,000 units in both 2019 and 2020 following nearly 40,000 units this year and 43,500 units in 2017,” Yu said.
The report says that the housing starts slowdown is set to continue through 2020 reflecting weaker housing demand.
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