Saturday, 17 November, 2018

Victoria home price growth to cool over next two years: forecast

Resale market to see lower sales, higher inventories around Metro Vancouver: CMHC Glut of unsold units to slow housing starts in Calgary through 2020, CMHC predicts
Ginger Lawrence | 08 November, 2018, 19:09

In its 2018 housing market outlook released today, the national housing agency projects housing starts and sales are both expected to decline in 2019 and 2020.

CMHC is still touting it as good news for renters because they'd be paying more even if the new supply of housing wasn't built. Our outlook is for the pace of price growth to slow over the forecast horizon. Average house prices are anticipated to range between $501,400 and $521,600 across the country. Buyers' market conditions are expected to slowly subside and this will help stabilize housing prices in 2019.

The report said existing home sales will experience a fourth-straight yearly decline in 2018, with stabilization and some growth in 2019.

Further gains are expected in 2020 as economic conditions improve, according to CMHC, however it cautioned rising mortgage rates will remain a constraining factor on resale activity.

"On a year-to-date basis, MLS sales have decreased 13.5 per cent from September 2017". The agency is forecasting the average Greater Victoria MLS home sale price to be between $693,900 and $703,300 this year (up from 2017's $652,928). As older units turn over, their rents will be increased to reflect the new price level. After peaking in 2016, sales dropped in 2017 and are still moderating.

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Over the past two years, sales growth for higher-end single-detached homes has boosted price growth. CMHC forecast range is: $387,100 to $390,500 this year; $390,000 to $393,700 in 2019; and $394,000 to $398,600 in 2020. For 2019, sales are expected to rise slightly, coming in between 478,400 and 497,400 units. It said, "Rental market conditions across B.C. are anticipated to loosen as a result of slower growth in demand and a significant amount of new rental units set to enter the market. Meanwhile, average rents for goal built apartments are anticipated to continue to see increases stronger than inflation in both 2019 and 2020".

Vacancy rates are expected to dip through 2020, but competition from the secondary rental market will keep vacancy rates from declining faster, the report said.

"Net interprovincial migration is turning positive and these new households will help lower the vacancy rate in Alberta".

The provincial vacancy rate which was 6.7 per cent in 2017 is expected to fall to 5.9 per cent this year, to 5.1 per cent in 2019 and to 4.9 per cent in 2020. While home price growth slowed in 2018, prices still remain above inflation and are outpacing expected targets.