Fourth Quarter — November 2016
HOUSING FORECAST BC HOME SALES TO MODERATE IN 2017 Multiple Listing Service® (MLS®) residential sales in the province are on pace to reach a record 113,800 units this year, an increase of 11 per cent compared to 2015. Many regional markets have performed exceptionally well over the second half of the year, largely offsetting more moderate demand in Metro Vancouver. However, it is unlikely that BC housing markets will repeat this year’s performance. Moderating economic conditions and policy headwinds are expected to slow housing demand by 15 per cent to 96,300 units next year. The BC economy has been a bright light in the country. Economic output is projected to increase 3.5 per cent this year, the third consecutive year that the economy will expand at a rate of 3 per cent or more and the strongest sustained rate of growth in a decade. A key catalyst in the economy has been employment growth. Over the first ten months of the year, more than 70,000 jobs were created in the province, boosting total employment by over 3 per cent. Relative strength in the economy is also largely responsible for a marked increase in the number of migrants from other provinces, particularly younger households from Alberta. While these strong fundamentals are expected to underpin housing demand in 2017, their rate of growth is expected to slow, leading to more moderate growth in consumption. Policy headwinds will be a negative influence on the BC housing market in 2017, especially in Metro Vancouver where a 15 per cent tax on foreign nationals curbs that market segment. This combined with the third tier of the Property Transfer Tax (PTT) applying an incremental 3 per cent tax on the purchase of homes priced over $2 million will likely moderate demand at the high end of the market. First-time and other low-equity home buyers will also be constrained by higher mortgage qualification requirements that could pull as much as 20 per cent of the purchasing power from this vital buyer group. Market conditions are expected to trend toward greater balance in the face of moderating demand and rising new home completions. While the average MLS® residential price is forecast to decline 6.4 per cent to $645,000 in 2017, most of that change will be due to relatively fewer higher priced homes selling in highly populated regions, particularly Metro Vancouver.
INSIDE Economic Outlook ................................................. 2 Vancouver Island-Coast ........................................4 Lower Mainland-Southwest ...................................6 Thompson-Okanagan.............................................8 Northern BC ......................................................... 10 Kootenay ...............................................................12 Tables ....................................................................13 1