No cooling is expected in B.C.’s hot housing market over the next couple of years, according to the latest forecast by Central 1 Credit Union.
In Kamloops, meanwhile, the fall outlook is strong and the median price is expected to continue its steady climb, fuelled by the same factors — low interest rates, growing economy and population increases.
In its long-range outlook issued Wednesday, Aug. 24, Central 1 predicts that high demand and tight supply mean prices will continue to rise in B.C., but new foreign buyer tax will temporarily slow Metro Vancouver activity, Central 1 predicts in its long-range outlook.
“Since our spring forecast we have raised our outlook for prices, reflecting the strong momentum early in the year and tighter than expected market conditions,” said Bryan Yu, senior economist with Central 1, which is the primary liquidity manager, payments provider and trade association for 42 credit unions in B.C.
“But we expect the pace of price hikes to slow through 2018.”
Sales will be lower than previously forecast but still at an elevated level due to tightening of housing policy measures. The foreign buyer tax will result in a temporary but substantial short-term cut in Metro Vancouver sales trend of 10 per cent that extends into 2017, Yu said.
“The tax puts further downward sales pressure on a market already slowing from spring fever. However, strength in the local economy will underpin sales and prices.”
While policy changes are expected to dampen home sales in Metro Vancouver, Central 1 has lifted its outlook for Vancouver Island markets and parts of the B.C. southern Interior as in-migration and low interest rates will drive sales and tightening inventory will lift prices.
Katherine Rutherford, president of Kamloops and District Real Estate Association (KDREA), said city realtors have seen a ripple effect this year as a result of soaring residential property prices in the Lower Mainland.
“For lifestyle or just because of our price point,” Rutherford said. “We’re still below Vernon and Kelowna in price point.”
She’s heard of only one consequence in Kamloops as a result of the foreign buyer tax brought in this summer. A realtor in Kamloops had a deal crash as a result of the new foreign buyer tax. A sale in the Lower Mainland collapsed and a purchase here crashed as a result.
“We’ve had a little bit of a slow summer, but that’s seasonal; home sales are always down in summer. All indications show we’re going to have a strong fall.”
Although there has been conjecture that the foreign buyer tax might bring some market fallout to the Interior, Rutherford said she can’t predict what the market may do beyond short term.
“We don’t have an international airport here. There is no indication that international clients are just going to flock here soon. I would love for them to come and see our beautiful little city, but we haven’t had any indication of that yet.”
In its latest update, KDREA reported a fairly busy summer with a seller’s market for homes up to the $400,000 range, a balanced market in the middle range and a buyer’s market in higher priced homes. Residential sales ere up 13 percent in July over the same month a year ago.
The residential median price in Kamloops increased to $413,900, representing a 12.5 percent increase over July 2015 when it was $367,500.
Central 1 predictions for the B.C. market over the next two years:
- The new foreign buyer tax will reduce Metro Vancouver area sales by 10 per cent.
- The provincial median annual price will rise 12 per cent this year to $480,000, gain four per cent next year, and 3.5 per cent in 2018.
- In Metro Vancouver, following a near 20 per cent gain in annual median price this year to $705,000, prices will rise 4.0 per cent in 2017 and 4.4 per cent in 2018 to $765,000.
- Housing sales growth rotates towards Vancouver Island and the Central Okanagan in 2017, before shifting back to Greater Vancouver by 2018
- Housing starts will remain above 40,000 units in 2017 and 2018.
- The Bank of Canada will maintain its policy rate at 0.5 per cent until mid-2018.