Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 14.1 per cent to 96,345 units this year, after posting a record 112,209 unit sales in 2016. Consumer demand has declined from the record level experienced during the first quarter of 2016. Rising property tax burdens aimed at foreign buyers and at sales of homes valued over $2 million have impacted home transactions, especially in Metro Vancouver.
In addition, new federal rules requiring low-equity homebuyers to qualify at the higher posted five-year mortgage rate, rather than their negotiated rate, will delay home ownership for many potential first-time buyers.
The BC economy is forecast to expand by 2.5 per cent this year and a further 2.7 per cent in 2018. Employment growth is also expected to remain on a solid footing, supported by international trade, strong population growth and consumer spending.
The dollar value of BC exports climbed nearly 10 per cent in 2016, led by solid wood products, energy and minerals. More than 50,000 individuals migrated to the province on a net basis during the first nine months of 2016, the highest level since 2008 and a 50 per cent increase from the previous year.
The unemployment rate is forecast to steadily decline from 6 per cent last year to 5.5 per cent in 2018. These fundamentals are expected to underpin consumer confidence and spending, with retail sales expected to climb by over 5 per cent each year through 2018.
A slower pace of consumer demand is expected to ease some pressure on a relatively-low level of housing supply. In addition, the high level of new home construction will eventually lead to a noticeable expansion of the housing stock, which will more adequately meet demand. However, market conditions will continue to be tilted in favour of home sellers in many regions, while home builders scramble to complete existing projects.
The average MLS® residential price in the province is forecast to decline nearly 5 per cent to $657,000 this year, largely the result of a larger proportion of multi-family home sales and some softness in the high end of the Metro Vancouver market. Multifamily forecast to grow in it’s proportion of sales.
(Copyright BCREA. Reprinted with permission.)