Housing Market in British Columbia to stabilize in 2020, accelerate in 2021, says federal report
After two years of steady decline in the Metro Vancouver housing market activity, experts at CMHC are predicting a major recovery over the next two years. John Hua reports.
According to a new housing market survey by the Canada Mortgage and Housing Corporation, which predicts that housing starts, sales and prices in British Columbia will begin to stabilize in 2020, and most likely accelerate in 2021.
The agency says favorable demographic and economic conditions in the province will drive fresh housing starts, which it states will be “relatively strong growth … when compared to other regions.”
After recording nearly 41,000 starts in 2018, CMHC is estimated a low of 39,300 and a high of 42,300 starts in 2019. This year could see a high of 44,700 starts and a low of 40,700 starts, followed by a high of 46,900 starts and a low of 41,900 starts in 2021.
As far as sales go, CMHC projects that British Columbia will also record stronger growth compared to other provinces, “consistent with growth in real disposable income that is forecast to exceed the national average over this time period.”
The agency states that sales across B.C. dropped significantly from over 103,000 in 2017 to about 78,000 in 2018, with an expected dip in 2019 to between 62,000 and 69,000.
Nevertheless, CMHC is predicting between 74,600 and 84,400 home sales for this year, rising to between 79,800 and 90,800 by next year.
Alongside the increase in sales, CMHC is predicting that prices will begin to go up again this year.
“British Columbia will see modest recovery in price growth in 2020 from a decline in 2019, but rise to the second-highest rate of price growth after Ontario in 2021,” says the report.
Despite an expected hike in prices, the agency states concerns around overvaluation in the region have reduced, as growth in market fundamentals over the same duration could be all that’s needed to support the rise in sales and prices.
The Canada Mortgage and Housing Corporation’s forecast projects a baseline B.C. price range of $656,600 to $723,400 for 2019, rising to $675,100 to $749,500 this year, and $718,400 to $801,600 in 2021.
According to the agency’s predictions, five-year mortgage rates will climb from about 5.2% this year to 5.6% in 2021.
It states that risks remain for the market, including Hugh household debt and global trade tensions which could be vulnerable to hikes in interest rate.