British Columbia, Tuesday May 28 – B.C.’s annual median house price will decline for the first time since 2012 and ongoing sluggishness will leave sellers sour until 2021, according to Central 1 Credit Union’s (Central 1) latest B.C. Resale Housing Market Outlook 2019 – 2021.
Central 1’s Deputy Chief Economist, Bryan Yu, said Metro Vancouver is at the epicenter of the downturn with sales plummeting more than 40 per cent since the end of 2018—driving prices down across all housing types.
“As the highest priced market in Canada, housing sales in Metro Vancouver have suffered the brunt of the federal B-20 mortgage stress tests and provincial measures such as the foreign buyer tax and speculation tax,” said Yu.
Buyers in the market for luxury multi-million-dollar properties in West Vancouver or the west side of Vancouver City stand to benefit from price drops of around 20 per cent.
While sales are approaching lows observed post the 2008/09 financial crisis, many prospective sellers are sitting out the current downturn.
“Sellers do not want or need to sell at a lower price. This contrasts with an economic recession where sellers are forced to sell due to job losses, wage declines or other economic circumstances,” said Yu.
Nevertheless, Metro Vancouver home values have declined more than seven per cent from peak, and further declines between five and seven per cent are expected over the next year. The median annual resale home price in the region declines seven per cent this year and three per cent in 2020 to $670,000.
Prices outside of Metro Vancouver will show greater stability with significant price appreciation in northern markets and modestly positive momentum on Vancouver Island. This limits the provincial median price decline to 4.1 per cent in 2019 and one per cent in 2020.
The report finds the ‘sweet in the sour’ as it reveals that the weak housing market is misaligned with a strong economy, reflecting a downturn driven by policy rather than the economy.
B.C.’s economic drivers remain a solid foundation with moderate economic growth near two per cent and positive employment figures including growth in employment, high job vacancies and the lowest unemployment rate in Canada.
Employment will not be dampened by faltering housing construction and related employment as major projects and a low Canadian dollar support growth in other areas.
Increased spending on roadways, bridges and hospitals will provide opportunities in the Lower Mainland. Construction of LNG Canada’s $40 billion liquefied natural gas terminal and related pipelines will boost the interior and northern coastal economies. Increased foreign spending in tourism as well as TV and film production is supported by a low Canadian dollar.
Highlights from the report:
• B.C. resale housing transactions to decline 11 per cent in 2019, followed by mild rebound
• Median home value declines four per cent, driven by Metro Vancouver downturn
• Declining Metro Vancouver prices environment to continue, as other regions hold steady
• Housing starts decline in both 2019 and 2020
• Solid economic environment upended by policy drivers
Read the full B.C. Resale Market Housing Outlook 2019-2021 that provides a deep dive into the resale market in B.C.
About Central 1
Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $19.2 billion in assets, we leverage our scale, strength and expertise to power progress for more than 250 credit unions and other financial institutions, enhancing the financial well-being of more than five million Canadians. For more information, visit central1.com
Central 1 Credit Union