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Soaring prices are expected in B.C.’s housing market through 2018-2019, according to a report.
Central 1 Credit Union’s Housing Outlook report for 2017 says while more restrictive mortgage regulation, rising interest rates, and high prices will temper some demand-side pressure over the next two years, the provincial median home value is expected to climb another 5% in 2018.
By 2019, it is expected to increase by 3% as inventory constraints in urban areas persist.
After a bounce-back in activity, fears that the Metro Vancouver market would face a year of reckoning following more restrictive housing policy in 2016 appear to be largely unfounded, though buyers are adjusting their behaviour in response.
“This is a testament to the desirability of homeownership and strength in the economy. With detached homes moving further out of reach, buyers are shifting their purchases out to the suburbs and into higher density housing, sending multi-family prices higher,” said Deputy Chief Economist Bryan Yu.
Similarly, housing markets on Vancouver Island and the Southern Interior of B.C. have experienced strong price growth and high sales, bolstered by economic growth, population growth, and demographic factors.
“The demand for multi-family housing is near record-high levels, which speaks to a demand for affordable housing, particularly in large urban areas,” explained Yu.
Credit 1 points to federal and provincial measures that tighten credit availability, which leads to “the most stringent housing policy environment in decades.”
They predict that as prices surge in the entry-level apartment and townhome markets, many would-be buyers will be sidelined, fueling further demand for already scarce rental housing and driving rent higher.
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