Vancouver’s hot housing market is expected to cool down in 2016 thanks largely to a lack of affordability, according to a report by Royal Le Page.
Metro Vancouver’s housing market experienced strong growth in 2015 with the median price of bungalows increasing 16.8 per cent year-over-year to $1,025,604. Royal Le Page is predicting Vancouver home prices will only increase 9 per cent this year.
“While most of the country will continue to see house value appreciation in 2016, we expect that the pace of price increases in Greater Vancouver and the Greater Toronto Area – where real estate appreciation has significantly outpaced job and wage growth – will settle to a more sustainable, single-digit price increase trajectory,” said Royal Le Page CEO Phil Soper.
Unsurprisingly, Vancouver was largely a sellers market in 2015, with prices making significant jumps in Burnaby, Richmond, and Surrey as well.
“Inventory remains constrained in many areas of the city, pushing prices even higher. The supply shortage is particularly critical for detached homes, which explains the double-digit price appreciation for this housing type in almost all neighbourhoods,” said regional manager for Royal Le Page Alan Stewart.
Stewart said many young people were squeezed out of the housing market in 2015 because of high prices, and that means we will see slower growth for the New Year.
“The year ahead is going to be an interesting one in the region.”
“Home prices are undoubtedly going to continue upward, although likely at a less frantic pace. While the supply and demand dynamics that have guided the market in recent periods will continue, we expect the rate of house price appreciation in the region to settle at a more sustainable single-digit price increase trend.”
While Vancouver saw the greatest growth for 2015, Richmond was hot on its heels, with a year-over-year leap of 13.4 per cent. That means the average home price in the city is $839,249. Housing supply for Richmond was down “significantly” in the final quarter of last year.