Photo: Paul Joseph/Flickr
BC condo prices are expected to see continued price gains this year and into 2018, as an influx of Millennials enter the market.
As more members of the generational group are ready to buy their first home, they will exert additional pressure on limited affordable housing options, according to the British Columbia Real Estate Association’s (BCREA) Housing Forecast Update, published on Thursday.
"They're about as large as the Baby Boomers and we all know what happened to real estate markets when the Baby Boomers entered their household forming years,” Cameron Muir, BCREA chief economist tells BuzzBuzzNews.
By the end of this year, the average price of a home (including condos, detached and attached properties) in the province is forecast to be $715,190 — up 3.5 per cent from last year.
Currently, condo prices in many of Vancouver’s surrounding suburban markets are growing at over 30 per cent a year, says Muir.
However, Millennials are only part of the story as most BC regions are experiencing a dearth of all property types for sale, creating seller’s market conditions.
BCREA says this imbalance is pushing prices higher for the most affordable home types as well as overall home prices across the province.
In 2018, BC home prices are forecast to hit $744,660, a 4 per cent increase from 2017’s expected average price.
Sky-high prices in Greater Vancouver are projected to continue their ascent this year and next year as well.
By the end of the year, the average price of a home in Greater Vancouver is forecast to be $1,040,000, up 2.2 per cent above 2016’s total.
The region is also expected to sell a total of 36,200 units by the end of the year, an 11.4 per cent drop from 40,880 units sold last year.
Overall home sales across BC are forecast to drop over the next two years but will still remain above the 10-year average.
Household demand continues to be fueled by the province’s strong economic growth, an increase in employment and growing population.
A total of 100,900 residential properties in BC are projected to change hands this year, down 10 per cent from a record 112,200 sales in 2016.
Muir says this decline is attributable to limited supply.
"There would be more sales going on, particularly in Victoria, Vancouver and some of the other urban centers if there was a greater availability of supply. And that's a real challenge right now, ” says Muir.
Home builders have nearly 40,000 units currently under construction in Metro Vancouver. Muir says about 80 per cent of these new homes will be condominiums, but until they’re completed, an imbalance between supply and demand will persist.
“Once many of those units are completed we'll likely see market conditions begin to trend toward more balance and less upward pressure on prices going forward,” says Muir.