Tighter mortgage rules and higher interest rates have dented buying power, but health of the economy backs higher demand.
The British Columbia Real Estate Association estimates that economic growth will remain strong enough to support a boost in sales next year after a substantial decline in 2018, according to its latest forecast.
When the dust settles at the end of this year, association chief economist Cameron Muir expects sales recorded through the Multiple Listing Service will have fallen 23 per cent to 80,000 transactions, compared with 103,768 in 2017.
“However, continuing strong performance in the economy combined with favourable demographics is expected to push home sales above their 10-year average in 2019,” Muir said Thursday in releasing the forecast.
Province wide, Muir’s forecast is for sales to rise 12 per cent to almost 90,000 units, but with a record number of new homes under construction and high levels of inventory, home prices will be more in keeping with inflation.
In Metro Vancouver, that is likely to mean sales in the region covered by the Real Estate Board of Greater Vancouver bouncing back to 31,400 transactions in 2019 and average prices edging up 2.9 per cent to almost $1.1 million.
In a still changing market, Muir’s forecast is slightly more optimistic than the Canada Mortgage and Housing Association forecast released earlier this week.
“Overall, we anticipate MLS sales to trough in 2018 and see some recovery in 2019 (and 2020),” according to the CMHC forecast, “while average prices will see a relatively flat growth profile with some risk of decline as demand and supply find a new balance.”
In the Lower Mainland regions as defined by the Fraser Valley and Greater Vancouver real estate boards, the CMHC forecast estimates that while economic conditions are still favourable, slowing population and employment growth have cut into housing demand.
The region covered by the CMHC’s forecast takes in submarkets of both the Real Estate Board of Greater Vancouver and Fraser Valley board and in its estimation, the area will likely see higher sales, but faces the likelihood that prices will decline further.
“This reality, when combined with housing policy changes from all levels of government, has resulted in an evolution of short-to-medium-term home price expectations,” according to the forecast, “compared with where they were one to two years ago.”