Greater Victoria real estate market closed out the year with double-digit increases

Sale prices for two-storey homes and condominiums jumped by double-digit percentages in the final three months of 2018, according to data released Friday by Royal LePage.

The real estate firm’s quarterly house price survey showed the median sale price of a two- storey home increased 13.2 per cent to $966,760, compared with the fourth quarter last year, while the median price of a condo increased 10.3 per cent to $512,024.

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The median sales price of a bungalow changed very little, rising just 0.7 per cent to $724,225.

Bill Ethier, associate broker at Royal LePage Coast Capital Realty, said the price increase was caused by a lack of inventory and increasing demand due to the healthy local economy. Would-be buyers, be they people coming to Victoria to work or retire, see the market here as a good place to live as well as a solid investment, Ethier said.

“Retirees who choose to buy a condominium are competing against first-time buyers, resulting in a lack of inventory. Retirees who are unable to find a condominium stay in their homes longer, resulting in a shortage of two-storey (homes). With a shortage of listings within these two housing types, prices in both property segments rose in 2018.”

Ethier said the shortage has been exacerbated by regulations introduced by federal and provincial governments that have slowed the real estate market. “As a result, we are seeing a decrease in new residential construction,” he said.

Nationally, the price of a home in Canada increased 4.0 per cent year-over-year to $631,223 in the fourth quarter of 2018.

During the same period, the median price of a two-storey home rose 3.9 per cent year-over-year to $745,007, while the median price of a bungalow climbed 1.5 per cent to $516,950.

Condominiums continued to see the highest rate of appreciation nationally when compared with the detached segment, rising 7.2 per cent year-over-year to $447,915.

“The invisible hand that guides our complex economy hit the real estate reset button in 2018 and that is a good thing,” said Phil Soper, chief executive of Royal LePage. “Major market home price inflation through much of the decade had led to dangerous overheating in our most populous regions.

“Government regulatory intervention and rising interest rates, when combined with property price overshooting, triggered the correctional cycle we find ourselves working through today.”

The Bank of Canada maintained its target for the overnight lending rate and reduced its forecast for annual GDP growth from 2.1 per cent to 1.7 per cent.

“While some economists are adjusting their forecast for the economy as a whole, Canada’s real estate market is beginning to emerge from the correction that began a year ago. The national real estate market is stable and should see modest price gains by the end of the 2019,” said Soper. 

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