“British Columbia’s GDP and employment growth have been above three per cent for three years now, GDP is currently tracking at 3.5 per cent,” says Cameron Muir, BCREA Chief Economist. “Population growth is also a significant factor, with over 8,000 people migrating to B.C. from other parts of Canada in the second quarter of 2016.”
On the horizon we may see rates increase as a few banks have already taken a lead in moving their key lending rates. CMHC is discussing options on raising the minimum required down payment
Last year Ottawa already raised the minimum down payment for the portion above $ 500,000 and I think it’s too soon for them to see the impact of the tighter lending policies. New rules for mortgage qualification were also implemented October 17th, 2016 which requires borrowers go through a “stress test” to qualify at the posted rate for a 5 year mortgage, specifically 4.64% when the discounted rate used is usually more than 2% lower. This could result in as much as a 20% drop in buying power.
Looking across the water to Vancouver it’s hard to determine whether the Foreign Buyer Tax, imposed at the beginning of August, has adversely affected the Vancouver market, nor whether the new housing rules introduced by the Government of Canada in October will have a longer term impact. Vancouver is experiencing three consecutive months of flat sales in August, September, and October. However, Vancouver’s housing prices are still high, ranking as the top city on the UBS Index with London ranking second. We are seeing many of B.C.’s new residents settling down in the Fraser Valley or on Vancouver Island as an alternative. I have recently been networking in both Kelowna and Vancouver, and do see two different market outlooks.
Over the next few months, we will see less inventory and lower sales through our local market as we enter the holiday season. We remain well below normal levels for inventory so we can expect early spring to be a great time to sell and a chance to keep ahead of a changing market.
