While many talk of a housing bubble than surely cannot be sustained, a new Central 1 Credit Union report issued April 19 predicts that current rising sales and prices will continue at least into 2018.
The Metro Vancouver real estate market so far this year has outperformed Central 1’s forecasts. The credit union now predicts sales growth of 22 per cent this year compared with 2015, and a median home price of $668,000, up 13 per cent over 2015. The report added that it expects detached home prices to rise considerably faster, at 23 per cent, to more than $1.1 million as a median across Metro Vancouver.
“Red-hot housing demand in Metro Vancouver… will continue to underpin provincial housing momentum,” said Bryan Yu, senior economist at Central 1.
“Detached homes make up a shrinking share of the housing stock and increasingly are no longer single-family dwellings as many now have rental units, legal or otherwise,” Yu added.
“The dream of a single-family detached home in Metro Vancouver is going to remain just a dream for most buyers.”
The report said that very high demand for local real estate is “only one part of the story, with a severe supply shortage a substantial driver of price appreciation.”
It added, “High prices will push more prospective buyers of single-detached homes into the multi-family market, while some entry-level buyers will be priced out and others will be unwilling to adjust expectations.”
Over the next two years, Metro Vancouver home sales growth is expected to slow in 2017 and 2018 because of “a combination of affordability erosion and lack of available inventory,” but the report added that total sales are expected to “remain elevated.”
The report also said that Central 1’s belief is that foreign ownership is likely to make up around 10 per cent of the market, and will remain more concentrated in the luxury sector. However, it added that this factor “does have ripple effects on the rest of the housing market as high-income households move down-market, lifting prices.”
Across the province, sales in 2016 are forecast to climb 17 per cent to about 109,500 units and the median price is expected to rise 10 per cent to $473,000.
Looking to next year, Central 1 is forecasting that sales in BC will remain flat around 109,000 units as “a mild decline in the Lower Mainland will be offset by growth in other regions.” but price growth will remain a solid 4.7 per cent.
House prices across BC are forecast to keep rising over the next three years, but “northern markets will remain slower than Metro Vancouver and Vancouver Island, constrained by weak oil, natural gas and commodity prices that are hurting the regional economies.”
To read the full report, click here.