The number of Greater Victoria and Vancouver Island residential sales are expected to continue slipping this year — but to a lesser extent than in 2018 — while prices are forecast to inch up slightly, according to a new report from the B.C. Real Estate Association.
B.C.’s residential real estate sector saw the number of properties sold fall by 24.5 per cent last year for a total of 78,345 sales. The federal government’s new mortgage stress test was cited for the decline from 2017.
“The negative shock to affordability and purchasing power created by the ... stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year,” Cameron Muir, chief economist for the B.C. Real Estate Association, said in the first-quarter report.
Housing prices had been at or near record levels. Now millennials who are eager to get into the housing market, are having a difficult time because of the stress test, Muir said Tuesday.
“We anticipated it would have a significant impact on the market, but certainly underestimated the duration.”
The biggest regional decline took place in Vancouver, where sales dropped by 31.6 per cent last year, followed by the Fraser Valley with a 30.8 per cent reduction.
Greater Victoria sales dropped significantly as well, by 20 per cent, to 6,770 last year.
This year, sales are predicted to slide in the capital region by four per cent to 6,500, while in 2020 they are expected to move up slightly by 3.1 per cent to 6,700.
Sales in the area north of the Malahat took a hit, decreasing by 16.4 per cent to 8,391 in 2018.
Predictions for the Island north of the Malahat in such centres as Nanaimo, Port Alberni and Courtenay-Comox have sales moving down by 4.7 cent this year to 8,000, before a small increase of 2.5 per cent to 8,200. The average price is anticipated to rise to $480,000 or 3.2 per cent this year. An increase of 2.3 per cent in price in 2020 would bring the average price to $491,000.
Across B.C., the association expects sales to rise by two per cent, to 80,000, this year and another 6.9 per cent, to 85,500, in 2020. That will still fall below the 10-year average of 85,800 annual sales.
As demand has dropped, the number of property listings has gone up. “Most B.C. regions have now experienced a shift in market conditions from sellers’ to balanced and buyers’ categories,” Muir said.
At the same time, a record number of homes are under construction, Muir said. About 75 to 80 per cent of those homes are multi-family and about 40,000 of the 60,000 being built are going up in Metro Vancouver, he said.
The trend toward densification with new additions to the housing stock is happening in the capital region as well, although not to the same extent as in the Lower Mainland. “Most improvement in consumer demand is expected to unfold over the next two years as households further adjust to the mortgage stress test,” Muir said.
The market is not expected to push prices up much this year. In fact, the average annual B.C. residential price forecast is virtually unchanged with only a 0.5 per cent rise to $716,100, Muir’s report said.
The capital region’s average residential price, for all types of residential property, was $700,630 last year. This year, it is forecast to be $703,000, a 0.3 per cent increase. And 2020 is predicted to move up by 1.1 per cent to $711,000.
On Friday, the Victoria Real Estate Board will be releasing its monthly sales and price report, which will reveal whether sales have started to pick up. For more than a year, sales numbers have fallen behind the same month the previous year.