Changes to mortgage policies are anticipated to be one of the leading contributors to the deflation of Metro Vancouver’s housing sale volumes, according to a new market update by the BC Real Estate Association.
It is expected sales within the Vancouver region will fall by -25.7% in 2018 – from about 36,600 units last year to 27,200 units this year. But there will be an upswing recovery of -13% to 30,800 units in 2019.
The average MLS price in 2018 will change by +1.9% to $1.05 million, an increase from $1.03 million last year. The rate of price growth will accelerate in 2019, increasing by +3.3% to $1.085 million.
Similar conditions are being forecast for the Fraser Valley, with sales falling by -26.3% this year to 15,800 and then rebounding slightly by -13.9% next year to 18,000. But the average price will rise more steeply in the Fraser Valley: $755,000 (+7.6%) in 2018 and $792,000 (+4.9%) in 2019.
The report states the B20 stress test on conventional mortgages and higher mortgage interest rates are reducing affordability and purchasing power.
“The impact of stringent mortgage qualification rules on conventional mortgage borrowers introduced this year has severely eroded affordability and the purchasing power of many potential home buyers,” reads the report.
“The resulting shock to housing demand is expected to temper home sales through the rest of the year.”
There is strong ownership interest from the large population of millennials who are now entering their household-forming years, coupled with low unemployment leading to a significant upward swing on incomes, thereby heightening consumer confidence.
Active listings in BC were up by almost 20% in July, and within the strained Vancouver market the number of active listings has gone up by 30% over the past year.
“The combination of slower housing demand and an increase in the inventory of homes for sale has trended most markets toward balanced conditions,” continues the report. “This means more selection for home buyers, fewer multiple offer situations and less upward pressure on home prices.”
New government controls on the housing market, of course, are another major factor to the changing status of real estate in BC.