Although stricter mortgage regulations have been weighing on BC home sales since the beginning of the year, activity is slated to pick up in the coming months.
“We expect to see some stronger consumer demand in the months ahead but still gradual improvement rather than a strong, sudden rebound in the marketplace,” Cameron Muir, chief economist at the British Columbia Real Estate Association (BCREA), tells BuzzBuzzNews.
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Last month, a total of 8,203 homes changed hands across the province, down roughly 17 per cent from a year ago, according to the BCREA’s latest data, published today.
Muir attributes the slowdown in sales to new mortgage rules that were introduced by the Office of the Superintendent of Financial Institutions (OSFI) on January 1.
“We’ve seen a pretty sharp decline in consumer demand over the first four months of this year. That has kind of stabilized now where we’ve seen March and April basically unchanged in the province, albeit up about one per cent [on a seasonally adjusted basis],” says Muir.
Muir notes that, historically, markets experience a sharp decline over the first three to four months whenever new regulations are introduced. Sales typically begin to recover after this adjustment period.
“That’s what we’ve seen in past cycles and that’s what we expect with the introduction of the stress test on conventional mortgages,” he adds.
With cooling demand, supply has increased across the province. There were a total of 28,940 active listings in April, up nearly nine per cent from a year ago. However, Muir notes that supply continues to remain quite low across the province.
As most BC regions have been trending toward more balanced conditions between supply and demand, home price gains are easing.
In April, the average price of a home in BC hit $730,507, a 0.2 per cent increase from April 2017.
Going forward, Muir says BC housing markets will likely see less upward pressure on prices as supply and demand conditions improve.