Photo: Ruth Hartnup/Flickr
Although new mortgage regulations are expected to impede activity in Greater Vancouver’s housing market next year, demand is slated to remain strong and prices are forecast to climb.
In 2018, prices are projected to rise six per cent year-over-year to $1,092,679, according to RE/MAX’s 2018 Housing Market Outlook, published on Thursday.
"Condominiums will continue to be very popular and we're, in all likelihood, going to see greater price increases in that segment,” Elton Ash, Regional Executive Vice President of RE/MAX Western Canada, tells BuzzBuzzNews.
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After prices soared for detached homes last year, demand for condos surged this year as they are a more affordable housing option in the region. In turn, condos experienced significant price appreciation.
The average price of a condo was $643,778 in 2017, up an estimated 16 per cent year-over-year from 2016.
In 2018, Ash says first-time buyers and move-up buyers are expected to drive demand in Greater Vancouver, particularly in the condo market.
"I don't think we're going to see a 16 per cent [price] range, it's likely going to be more in the 10 to 12 per cent price range for condominiums,” says Ash.
Conversely, detached home prices were roughly stable year-over-year in 2017 and this trend is expected to continue in the New Year.
"The real estate market itself has diverged into two very distinct paths, with detached homes remaining pretty stable year-over-year as we move forward into 2018. Whereas, in the condominium market we'll see much greater appreciation,” says Ash.
Although demand is expected to remain high in Greater Vancouver, new mortgage qualification rules are expected to impact affordability for buyers at the lower end of the market.
On January 1, a new stress test for uninsured mortgages comes into effect, which will slow activity in the first part of 2018, says RE/MAX.
However, thanks to BC’s booming economy, consumer confidence is strong and that will most likely temper the overall effect of the new mortgage regulations, says Ash.
Many Canadians appear to believe that the new mortgage rules won’t impact them, based on a survey conducted by Leger on behalf of RE/MAX.
"Canadians aren't fully aware of the new stress test regulations for conventional financing. And so while 58 per cent of Canadians are aware of it. Interestingly enough, nearly 30 per cent don't believe that it will have any effect on their borrowing ability,” says Ash.
Going into 2018, Ash says Greater Vancouver’s market is showing signs of being balanced.
He adds that the relatively healthy market has strong economic fundamentals and does not signal that there will be a bubble burst.