One of Canada’s most expensive markets, Vancouver, may be in for further home price increases this summer, as the region’s cooling off period appears to be waning.
After the region achieved record-level prices last year, the market began to show signs of easing in the latter half of 2016. However, according to RBC Economics’ latest report published this week, prices are set to rebound over the next few months.
“It looks like the market is tightening again which will put some upward pressure on prices,” RBC Senior Economist Robert Hogue tells BuzzBuzzNews.
In July last year, average home prices soared to $930,400, a record 32.6 percent year-over-year increase, according to the Real Estate Board of Greater Vancouver (REBGV). In the second half of 2016, price increases began to decelerate, likely due to the provincial government’s attempt to cool the market with the introduction of a foreign-buyer tax.
Last month, the average price of a home in Greater Vancouver was $941,100, an 11.4 per cent increase compared to April 2016.
April was the third consecutive month that Vancouver’s home price index continued to increase in 2017. Hogue suggests this trend will persist in the upcoming warmer months.
“The way that things are shaping up is that probably by June or July we should start to see the year-over-year price increase moving up in Vancouver,” says Hogue.
Last month, existing home sales in the region were up 15.6 per cent compared to March 2017, says RBC.
This increase impacted the sales-to-new listings ratio, which tightened for a third straight month in April to 0.73.
Typically, when a ratio is above 0.6, home prices experience upward pressure, resulting in seller’s market conditions, says REBGV.
As for a repeat of last summer’s 32 per cent year-over-year home price increase, Hogue says with completed developments entering the market this year and next, that should mitigate pressure on prices.
“My gut feeling is that it’s unlikely, but it’s not impossible,” says Hogue.