Greater Victoria, which experienced a strong home sales market and improved homebuilding numbers in 2014, can expect more of the same as the new year unfolds, according to housing market economists.
That was the message laid out Wednesday night at the Victoria Residential Builders’ Association’s annual Crystal Ball forecast dinner.
Cameron Muir, chief economist with the B.C. Real Estate Association, said Victoria will continue to build on the momentum established in 2014.
In an interview ahead of his presentation, Muir said last year’s 15 per cent increase in home sales in Greater Victoria should be followed up by a sales increase of between six and seven per cent this year while prices should also continue to improve.
“Market conditions in Victoria are in relative balance. On average, on the price side of things, we can see an increase of about 2.5 per cent in 2015,” Muir said, noting that comes on the heels of a 3.2 per cent increase in average selling price in 2014.
Muir said the housing market reflects the general strength of the provincial economy, which he pegs to grow at 2.7 per cent in 2015 and 2016.
He said beyond 2016, growth could be higher, spurred on by anticipated investment in liquefied natural gas and transportation projects.
“Better employment numbers will also help underpin housing demand as will consistently low interest rates, which look like they have more downward pressure than up, and that bodes well for the housing market,” Muir said.
The new home building market is also expecting big things from 2015.
Casey Edge, executive director of the region’s residential builders, said his members have already seen activity starting to increase.
“I think everyone is hoping for continued growth in construction moving forward. We believe the numbers bottomed out in 2013 for single-family homes,” Edge said. Builders’ hopes have been buoyed by strong job numbers, which tend to translate into demand for new homes.
Last year, Greater Victoria saw 1,315 new homes started, but that is expected to jump significantly in 2015, according to the Canada Mortgage and Housing Corp.
In an interview before the Crystal Ball, Eric Bond, CMHC’s senior market analyst for Vancouver Island, said a variety of factors, including healthy in-migration and improved employment prospects, will mean Victoria sees “quite an increase” in housing starts.
Bond said this year Victoria is forecast to see 1,825 new homes started, most of them multi-family condominiums and rental housing projects.
“Certainly demand for housing is increasing and that demand has to be met by the market,” he said.
That translates into sustained growth in homebuilding. Bond said Greater Victoria should see around 1,750 starts in 2016.
Bond also addressed the region’s rental market, saying the demand for new supply continues.
“In 2014, we saw a decline in vacancy rate across B.C. [to 1.5 per cent last year from 2.4 in 2013] while in Victoria the rate went from 2.8 per cent in 2013 to 1.5 in 2014,” he said.
Bond said that rate is being driven down by in-migration, an overall improving economy which means young people have better job prospects and are more likely to strike out on their own and an older population that is living longer and healthier.
