This year will be the third straight where home sales decline, and for the first time since 2012, so will B.C. average home prices, Central 1 Credit Union says in its latest forecast.
鈥淓arly 2019 home sales continue to deteriorate as federal and provincial policies continue to weigh on demand and lead to price declines among some of the larger urban markets,鈥� says the organization representing credit unions in B.C. and Ontario.
The report, , says new home starts have held steady early this year, 鈥渂ut a sharp pullback is expected in the second half of 2019 as weakening resale market and pre-sale conditions cool construction.鈥�
Central 1 forecasts that housing starts will decline 14 per cent this year to 35,000 units and slip further to around 33,000 units in 2020 and 2021. The report notes that this is still above 2016 levels, and the declines are confined to larger urban markets.
The report says smaller real estate markets have generally held steady, and northern B.C. housing demand is being supported by work beginning on liquefied natural gas facilities and pipelines. Alberta鈥檚 slow economy is identified as slowing sales of recreational properties in the B.C. Interior.
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The federal government鈥檚 addition of a 鈥渟tress test鈥� for bank mortgages in 2018 has required borrowers to qualify their ability to pay if interest rates increase, after a long period of low rates led to personal debt rates rising. B.C. has focused on increased taxes for foreign buyers and second homes in urban areas that have low rental vacancy rates and high purchase prices.
B.C.鈥檚 foreign buyer tax and speculation tax were extended to urban areas outside Metro Vancouver, where 20 per cent declines have been seen in high-end properties and high-priced locations such as Vancouver and West Vancouver.
鈥淪imilarly, sales in Kelowna, Abbotsford-Mission and Victoria have seen their sales slumps extend into 2019,鈥� the report says. 鈥淲hile not of the same magnitude, sales are lower by more than 20 per cent, year over year.
鈥淲eak activity in Metro Vancouver is contributing to fewer recreational and retirement home purchases in other markets, as homeowners face lower price/equity and difficulty selling their properties.鈥�
tfletcher@blackpress.ca
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