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Metro Vancouver, Kelowna housing markets set to cool: Re/Max Canada

Both markets expected to see softening sales due to low supply and high mortgage rates
Lack of affordability is influencing roughly half of millennial and generation Z buyers, according to a new report. | Chung Chow, BIV

Housing sales in Metro Vancouver and Kelowna are expected to cool alongside the weather in the coming months.

A new report forecasts Canada's real estate market will be softer this fall with average home prices predicted to remain flat.

This prediction means a better balance between supply and demand for the two B.C. cities, with an expected softening in sales of five per cent and a decline in prices of two to three per cent, according to Re/Max Canada’s Sept. 5 report.

This differs from other markets like Calgary and Edmonton, which are both expected to see an increase in sales ranging from 0.7 per cent to 4.5 per cent.

“[Calgary and Edmonton] went through seven years of bad markets up until about a year and a half ago, so there was pent up demand. Also, Calgary and Edmonton are more affordable because affordability is a big issue across the country. And when we come to British Columbia, the issue really is overall affordability,” Elton Ash, executive vice-president of Re/Max Canada, said in an interview.

In its fall housing market outlook, Re/Max Canada says the forecast comes as the housing market deals with high interest rates and a lack of homes for sale. The forecast comes one day before the Bank of Canada’s next interest rate announcement.

Ash predicts the central bank will hold its overnight rate steady at five per cent following a 25-basis-point hike in July.

“That's going to mean a continuation of the uncertain markets that we've been experiencing this year. In other words, it's going to really be very regional and specific in nature,” he said. “Alberta is going to continue to enjoy a relatively positive market, whereas Vancouver and Kelowna will be balanced to somewhat softening prices.”

The report cites an online survey that found 33 per cent of Canadians interested in buying and/or selling a home in the next 12 months will wait and see how changes to interest rates play out before buying.

The survey also shows that a lack of affordable housing stock is leading 55 per cent of generation Zs and 49 per cent of millennials to change their housing plans.

“The millennial demographic is what's driving the market now as opposed to the old baby boomer segment. And so that combination of factors is really what's going to affect British Columbia as compared to Alberta,” Ash said.

The online survey of 1,517 Canadians was done by Leger between July 21 and July 23.

The poll cannot be assigned a margin of error because online surveys are not considered truly random samples.

-- With files from The Canadian Press