Record housing sales in the majority of British Columbia are offsetting declines in Metro Vancouver caused by the new foreign homebuyers’ tax.
“The introduction of a 15% tax on foreign national home buyers in Metro Vancouver is expected to accelerate a moderating trend in the market that began earlier in the year,” said Cameron Muir, Chief Economist of the B.C. Real Estate Association (BCREA). “However, other regions of the province are performing above expectations and at the provincial level, largely offsetting Metro Vancouver’s deceleration.”
Even with the new foreign homebuyers’ tax and Vancouver’s housing slowdown, B.C. continues to have record housing sales. Residential sales in the province are predicted to climb more than 10% to 113,000 units, beating the previous record of 106,310 in 2005. According to BCREA, housing starts in B.C. are also expected to reach near record levels in 2016, hitting the highest amount in over two decades. This increase may be short lived with a projected decrease of 7.8% in housing unit sales of 2017.
In 2016, the average housing price in Greater Vancouver is forecasted to rise 14% to $1,030,000 from 2015, following an increase of 11% last year. While housing prices are still expected to rise in 2017, it will be by a significantly smaller amount. Vancouver housing prices are expected to grow only 5.8% in 2017, increasing $60,000. The increase is less than half of the dollar increase from 2015 to 2016 of almost $130,000. This will be the first since 2012 that the increase in housing prices will be less than the increase in the previous year.
The number of residential sales in Metro Vancouver is expected to fall 1% in 2016, the first decrease since 2012. The BCREA forecasts that over 400 fewer residential spaces will be sold in 2016 than in 2015, and an additional 2,800 fewer residential sales in 2017.
In B.C. as a whole, housing prices are forecasted to increase 11% to an average of $706,900 from $636,600 in 2015.
While housing demand is expected to decline by nearly 8% to 104,400, it is still forecasted to be well above the 10-year average of 85,000. Muir remains positive about the future for Vancouver homebuyers.
“While the cyclical nature of housing markets can exact a harsh toll on affordability in the short term, there is some relief for beleaguered home buyers on the horizon,” said Muir. “A moderation in housing demand combined with a rising number of both new and resale home son the market is expected to create more balance and less upward pressure on home prices.”
