The benchmark price of a single-family home in the Vancouver Island Board area broke the $500,000 mark in May, rising to $507,700, a 17 per cent increase from one year ago. With Nanaimo above the $525,000 mark. Single-family homes are down 17 per cent from last year but posted a month-over-month increase of nine per cent. Last month, 520 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 476 in April and 630 one year ago.
In its 2018 Second-Quarter Housing Forecast, the British Columbia Real Estate Association (BCREA) anticipates that MLS® residential sales in the province will decline by nine per cent to 94,200 units this year from 103,700 in 2017. “B.C. housing markets have benefited from the provincial economy expanding well above trend growth over the past four years,” says BCREA chief economist Cameron Muir. “However, economic growth is expected to slow and reflect the longterm average this year.” Housing demand in the VIREB area shifted lower in the first four months of 2018 as stricter mortgage qualifications for conventional borrowers took their toll on household purchasing power and affordability. Other economic headwinds that could dampen demand include higher interest rates and new provincial taxes. However, the attractiveness of Vancouver Island to retirees and millennials is expected to mitigate their impact somewhat. Despite lower sales thus far in 2018, lack of inventory continues to tilt the market in favour of sellers and push prices upwards. The pace of these increases could slow somewhat if demand keeps declining, but it is unlikely that prices will drop until additional inventory enters the market by way of new construction. “Housing starts are up on Vancouver Island, particularly in Nanaimo, so there is some relief on the horizon.
The Canadian economy first quarter growth came in at just 1.3 per cent, well below the consensus forecast of 2 per cent. The observed weakness can be traced back to the impact of newly implemented mortgage stress tests, which force conventional mortgage borrowers, including those with more than 20 per cent down payment, to qualify at the greater of the five-year fixed qualifying rate or their own contract rate plus 2 per cent. These more stringent qualifying requirements have eroded as much as 20 per cent of would-be buyers’ purchasing power. Not surprisingly, that policy has blunted housing activity across Canada.
Changes in population from migration and immigration:
Positive international immigration added to gains due to inter-provincial migration, resulting in a net increase of 10,728 people to British Columbia’s population in the first quarter of 2018. This was a decline of 11.7% from the previous first quarter.
Changes in population from movement within Canada:
Some 12,862 people moved to British Columbia from other provinces in the first quarter of 2018. This was down 13.1% from a year earlier. Fewer people came to British Columbia from Alberta and Ontario compared to a year earlier, contributing to the decline.
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