The B.C. housing market will remain robust over the next two years, particularly on Vancouver Island, says the latest forecast by Central 1 Credit Union.
“Since our spring forecast we have raised our outlook for prices, reflecting the strong momentum early in the year and tighter than expected market conditions,” said Bryan Yu, senior economist with Central 1, which is the primary liquidity manager, payments provider and trade association for 42 member credit unions in B.C. “But we expect the pace of price hikes to slow through 2018.”
Sales will be lower than previously forecast but still at an elevated level due to tightening of housing policy measures.
“The foreign buyer tax will result in a temporary but substantial short-term cut in Metro Vancouver sales trend of 10 per cent that extends into 2017,” Yu said. “The tax puts further downward sales pressure on a market already slowing from spring fever. However, strength in the local economy will underpin sales and prices.”
While policy changes are expected to dampen home sales in Metro Vancouver, Central 1 has lifted its outlook for Vancouver Island markets and parts of the B.C. southern Interior as in-migration and low interest rates will drive sales and tightening inventory will lift prices.
Highlights from the forecast include:
The new foreign buyer tax will reduce Metro Vancouver area sales by 10 per cent;
The provincial median annual price will rise 12 per cent this year to $480,000, gain four per cent next year, and 3.5 per cent in 2018;
In Metro Vancouver, following a near 20-per cent gain in annual median price this year to $705,000, prices will rise four per cent in 2017 and 4.4 per cent in 2018 to $765,000;
Housing sales growth rotates toward Vancouver Island and the central Okanagan in 2017, before shifting back to Greater Vancouver by 2018;
Housing starts will remain above 40,000 units in 2017 and 2018;
The Bank of Canada will maintain its policy rate at 0.5 per cent until mid-2018.
For the full report, please visit www.central1.com.