This year will be the third straight in which home sales decline in the province.
And, for the first time since 2012, so will B.C. average home prices, Central 1 Credit Union said in its latest forecast.
“Early 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,” said the organization representing credit unions in B.C. and Ontario.
The report, Resale Housing Outlook 2019-2021, states new home starts have held steady early this year, “but a sharp pullback is expected in the second half of 2019 as weakening resale market and pre-sale conditions cool construction.”
Central 1 forecasts that housing starts will decline 14 per cent this year to 35,000 units and slip further to approximately 33,000 units in 2020 and 2021. The report notes this is still above 2016 levels, noting the declines will be confined to larger urban markets.
The report states smaller real estate markets have generally held steady, noting northern B.C. housing demand is being supported by work beginning on liquefied natural gas facilities and pipelines. Alberta’s slow economy is identified as slowing sales of recreational properties in the B.C. Interior.
The federal government’s addition of a “stress test” 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.’s 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.
“Similarly, sales in Kelowna, Abbotsford-Mission and Victoria have seen their sales slumps extend into 2019,” the report states. “While not of the same magnitude, sales are lower by more than 20 per cent, year over year. Weak 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.”
In Kamloops, sales are down by nine per cent through the first half of the year — 1,411 homes have been sold through June 2019, compared to 1,540 sales through the end of June 2018.
In June, 262 homes were sold in Kamloops, compared to 328 homes sold in June of last year, representing a 20 per cent decline.
While activity is down, home prices have not yet been affected. The average sale price across the market (single-family, townhouses and apartments) in June was $425,000, up by nearly nine per cent from last June, when the average sale price was $391,000.
Seventy-three sales in June were for between $400,000 to $500,000. The average single-family home price is sitting at $495,000, compared to $492,000 in May. Three homes sold for more than $1 million in June.