The Canada Mortgage and Housing Corporation report predicts Metro Vancouver will have a balanced housing market, with moderate increases to home prices.
The Metro Vancouver housing market will see higher sales and modest price increases over the next two years, according to a Canada Mortgage and Housing Corporation forecast.
The CMHC report, released Thursday, forecasts income and population growth will not only support a rebound, but also create a balanced housing market in Metro Vancouver through 2020 and 2021.
“While inventories of homes for sale are expected to decline slightly as sales increase, a growing number of newly constructed homes coming onto the resale market will help keep market conditions balanced overall through the end of the forecast horizon,” the report says of the Metro Vancouver region.
Mortgage qualification rules, also known as the B-20 stress test, will limit the borrowing capacity of some home buyers, the CMHC report said, which will limit price growth. However, it also said greater discounts on mortgage interest rates will lend support to the housing market.
Home prices in Metro Vancouver dropped 5.2 per cent drop in July, August and September, compared with the same three months in 2018, according to Royal LePage survey.
CMHC predicts the average price of a home in Metro Vancouver in 2020 will go as high as $983,000 and up to just over $1 million in 2021.
That compares with an average of up to $928,000 for this year, $966,866 in 2018, and $934,977 in 2017.
Townhouses and condominiums with prices under $700,000 in Metro Vancouver are expected to see the strongest demand, while the single-detached market is expected to remain soft, particularly with higher-end, multi-million dollar homes.
As the market moves from buyers’ to balanced conditions, the CMHC says new condominium developments in Metro Vancouver are expected to see greater presale activity, which will encourage more development.
Renters, however, will continue to feel the pinch in the region with rental rates expected to increase faster than inflation. Rental demand will remain high throughout the forecast period, CMHC says, resulting in continued low vacancy rates and rising rents across the region.
CMHC’s chief economist Bob Dugan says in Canada housing starts are projected to stabilize at levels in line with long-run averages, following two years of declines from elevated levels in 2017.
“Resale activity and house prices are expected to fully recover from recent decline,” he said, in a news release Thursday.
The CMHC outlook forecasts Canadian housing market activity for the years of 2020 and 2021.
The report says multi-family construction will account for the vast majority of new units as densification continues. Housing starts are expected to register a second consecutive annual decline in 2019 before stabilizing in 2020 and 2021.