British Columbia’s housing market continued to sit in sellers’ territory in October, as fierce demand outweighed supply across the province.
A total of 8,677 homes changed hands in the region last month, up 19 per cent from a year ago, according to the latest data from the British Columbia Real Estate Association (BCREA), published on Tuesday.
“Overall, demand in the province is being underpinned by very strong economic performance. We’re in our fourth year of real GDP growth above three per cent, this year we’re going to come in close to four per cent,” Cameron Muir, BCREA’s Chief Economist, tells BuzzBuzzNews.
Last month, homes sales were up 23 per cent from January 2017 on a seasonally adjusted basis, says Muir.
However, elevated demand for affordable housing types, including condos and attached homes, was met with limited supply.
Last month, active listings totalled 27,987 units in BC, down 5 per cent from October 2016. Over the last five years, listings have plummeted almost 50 per cent in the province.
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With strong demand and a lack of supply, the ratio of home sales to active listings was 31 per cent in October compared to 25 per cent a year ago. According to BCREA, the BC housing market is considered relatively balanced when the ratio is between 12 and 20 per cent.
As BC copes with limited supply, prices continue to experience upward pressure.
In October, the average price of a home in BC was $720,129, soaring roughly 19 per cent from the same period a year ago.
With rising prices and imminent federal policy changes, housing affordability could be at risk of further erosion, particularly in Metro Vancouver.
“Affordability is being hit by both rising prices, rising interest rate environment and tougher mortgage qualification rules and that’s likely going to provide some headwinds for overall demand in 2018,” says Muir.
In the new year, Muir anticipates that sales will likely drop five to 10 per cent across the province overall. In addition, he notes that there will be less upward pressure on prices as more supply is expected to enter the resale and new home markets next year.
“We’re not expecting to see any significant price declines but rather most markets will trend themselves towards more balanced conditions,” says Muir.