Sales of homes across BC are forecast to reach a record 115,200 units this year, up 12.3 per cent from 2015, before pulling back by more than 8 per cent next year, according to a market analysis from the British Columbia Real Estate Association (BCREA) published June 2.
The association's second-quarter report said, “While the frenetic pace of consumer demand this spring is unlikely to be sustained over the longer term, BC’s strong-performing economy is expected to backstop the market and keep demand for housing at an above-average level through 2017.”
Average prices across the province are predicted to rise, jumping 20.4 per cent in 2016 to $766,600 and then increasing at a much slower 3.4 per cent to $792,800 in 2017.
“Robust employment growth and a marked increase in migration from other provinces is buoying consumer confidence and housing demand in most regions of the province,” said Cameron Muir, BCREA’s chief economist. “Record housing demand has depleted inventories in many urban areas, and the resulting imbalance between supply and demand has pushed home prices considerably higher."
The report said that new housing production has “ramped up” in order to meet the blistering demand for homes, suggesting that the new inventory will help bring down the rate of price growth when it comes on stream in 2017.
Housing starts in BC are forecast to climb 20 per cent to 37,800 units in 2016, with 34,200 new units predicted for 2017.
However, the report added that Metro Vancouver in particular may take some time to recover from its inventory shortage.
“The lengthy time lag between a housing start and its completion means that markets experiencing the most severe supply droughts, like Metro Vancouver, will likely remain in sellers’ market territory for the foreseeable future,” wrote the authors.
The BCREA's report comes a couple of weeks after the Canada Mortgage and Housing Corporation's forecast for Metro Vancouver's market over the next two years, which predicted a very similar trend of home sales moderating next year as prices continued to rise at a slowing rate.
To see the full BCREA report, including forecasts for regional centres such as Vancouver Island, the Okanagan and Northern BC, click here.