Lower Growth Expected for Economy and Housing Market
BCREA 2018 Second Quarter Housing Forecast Update
The British Columbia Real Estate Association (BCREA) released its 2018 Second Quarter Housing Forecast today.
Multiple Listing Service® (MLS®) residential sales in the
province are forecast to decline 9 per cent to 94,200 units this year,
after posting 103,700 unit sales in 2017. MLS® residential sales are
forecast to remain relatively unchanged in 2019, albeit down 0.2 per
cent to 94,000 units. Housing demand is expected to remain above the
10-year average of 84,800 units into 2020.
“The housing market continues to be supported by a strong
economy,” said Cameron Muir, BCREA Chief Economist. “However, slower
economic growth is expected over the next two years as the economy is
nearing full employment and consumers have stepped back from their 2017
spending spree.”
“Demographics will play a key role in the housing market over the
next few years,” added Muir, “as growth in the adult-aged population is
bolstered by immigration and the massive millennial generation enters
its household forming years.”
Muir notes there are, however, significant headwinds in the
housing market. “Rising mortgage interest rates will further erode
affordability and purchasing power, with the effect being exacerbated by
an already high price level. The legacy of tougher mortgage
qualifications for conventional mortgagors will be a reduction of their
purchasing power by up to 20 per cent, and the provincial government’s
expansion of the foreign buyer tax and several other policies aimed at
taxing wealth is sending a negative signal to the market and likely
diverting investment elsewhere.”
The combination of slowing housing demand and rising new home
completions is expected to trend most BC markets toward balanced
conditions this year, and lead to less upward pressure on home prices.
If you are a Seller, we can chat about the property valuation and how to leverage yourself, let me know and we can sort.
If you are a Purchaser, touch base and we can chat about the implications of the qualifying stress tests. 250-884-3980
My Best, Arran McLellan
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