Short of a downturn, Canada Mortgage and Housing Corporation (CMHC) has forecast a ‘moderation’ in Metro Vancouver’s housing market in 2019 and 2020, according to its latest Housing Market Outlook.
The federal agency says the local housing market can expect lower sales, higher inventories of homes for sale, and slightly lower home prices compared to the recent market highs experienced in the region.
“This shift in conditions marks the end of the ‘two-speed’ market conditions that had prevailed in the region since mid-2016, whereby lower-priced properties experienced higher demand and price growth compared with higher-priced properties,” reads the report.
“As 2018 has progressed, demand and home prices have now softened across all market segments and local geographies. Slowing population and employment growth and rising mortgage rates have impacted demand for some properties in the Vancouver CMA.”
Resale volumes will remain below the levels recorded from 2015 to 2017, but volumes in 2019 will be higher than the trough in 2018 – more in line with the region’s growing population.
A record number of new units currently under construction will also prompt a decline in housing starts over the next two years. And with both new housing and public infrastructure projects factored, construction costs of materials and labour could “restrain the viability of some new developments.”
“New condominium apartment developments may face longer sales periods over the forecast horizon as consumers have more options in a rising inventory environment,” continues the report.
“From a tenure perspective, new rental projects are expected to comprise a greater share of the construction mix due to tight rental market conditions and a more favourable development environment in many municipalities in the region.”
However, the rental market will remain tight, with average rents continuing the trend of rising quicker than inflation.
“The increasing share of new, typically more expensive, rental units in the market as well as rents for existing units rising to market levels with the turnover of long-term tenants will also contribute to higher average rent levels,” adds the report.
Across the country, especially Toronto, CHMC is expecting a moderation in both housing starts, sales, and prices.