Following a banner year of BC home sales in 2014, in which sales were up 15 per cent year over year, MLS® resales are forecast drop 5.8 per cent in 2015, according to a Canadian Mortgage and Housing Corporation (CHMC) report released February 6.
Last year’s 84,049 home sales will fall to a total of 79,300 units in 2015 before levelling off to 79,200 units in 2016, said the report.
Carol Frketich, CMHC’s BC regional economist, told REW.ca that the anticipated drop was due to a number of economic factors.
“We expect the 2015 resale market in BC to moderate as we saw a particularly strong 2014, especially towards the end of the year. Sales were up across the province and were particularly strong in the Interior markets. Lower oil prices may have an impact on demand for recreational properties and second homes, especially in the Interior. We also saw fairly weak growth in 2014 employment in BC, which may have a knock-on effect to 2015 home sales.
“It’s also possible that many people bought homes in 2014 as they sought to get ahead of the interest rate rises we expected for this year, so the sales were brought forward into 2014. The cut-off date for this forecast was prior to the Bank of Canada’s latest interest rate cut. Now that rates are actually falling, it’s entirely possible that 2015 sales will outperform this latest forecast.”
MLS® resale prices are predicted to continue their recent climb, but at a much slower pace, said the report. The average home price is forecast to reach $577,700 in 2015 and $588,000 in 2016, respectively a 1.6 and 1.8 per cent climb. This is compared with 2014’s $568,405, which was a rise of 5.8 per cent over 2013.
Housing starts in the province are forecast to remain steady through 2015 and 2016 at 28,300 and 29,000 respectively compared with 2014’s 28,356 starts.
Frketich said, “Multiple-family starts will be stable in 2015 and then pick up in 2016 as demand for denser housing forms increases and inventories of completed and unabsorbed units are drawn down. Single-detached home starts are expected to remain relatively unchanged over the forecast horizon.”
Vancouver housing starts are predicted to drop 2.7 per cent to 18,700 units in 2014 before recovering in 2016 by increasing 2.9 per cent to19,250 units in 2016.
Across Canada, housing starts are also predicted to remain fairly flat at 187,400 units in 2015 and 185,100 units in 2016.