BCREA 2019 Fourth Quarter Housing Forecast
After a slow start to 2019, MLS® home sales in BC have embarked on a sustained upward trend since the spring. Slower BC economic growth and headwinds emanating from the South, along with the dampening effects of federal mortgage rules and provincial tax policy, mean that home sales are simply returning to trend after sustaining a significant shock, rather than returning to the heights of recent years.
Despite the significant improvement in market activity, sluggishness out of the gate will likely mean that provincial MLS® sales decline for a third consecutive year in 2019 to 77,100 unit sales. However, we expect all markets across BC to post rising sales in 2020 with total provincial MLS® sales up 10.9 per cent to their long-run average of about 85,500 units. As demand normalizes, the accumulation of resale inventory has reversed course in many markets around BC. We anticipate that this trend will continue in 2020 with sales and listings finding balance. For most markets this will mean price growth that’s in-line with inflation, though for some supply-constrained areas we are forecasting strong price growth. This is particularly true in the parts of Northern BC most directly impacted by massive LNG Canada investment. After a projected 2 per cent decline in the provincial MLS® average price in 2019, we anticipate a rise of 3.6 per cent in 2020.
Unexpectedly strong new home construction activity continued in 2019, particularly in Metro Vancouver. Total provincial housing starts are forecast to rise close to 8 per cent this year, surpassing the 40,000-unit mark for a third consecutive year and reaching a record high of 44,000 total starts. That elevated pace of new home construction adds to an already large pipeline of homes under construction. The overwhelming majority of those units are apartments, which have long and variable completion times. However, as this supply is added to the market, future price growth will likely be constrained.
Provided by: BCREA
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