B.C. Home Prices and Sales to Head Higher, Central 1 Credit Union Forecasts

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 20, 2015) - After a strong 2014, the B.C. housing market will again see rising sales and prices in 2015, says a new forecast by Central 1 Credit Union.

However, the gains will be comparatively modest, with sales up five per cent compared to 18 per cent last year, while the median provincial home price will climb 2.5 per cent to $414,000. Looking ahead, the expanding economy will keep transactions on a positive trend through 2018 with average annual price increases above two per cent.

"Regional variations will persist over the next few years, particularly given recent gyrations in oil prices," says Bryan Yu, senior economist with Central 1, the trade association and financial facility for B.C.'s 42 credit unions.

Market conditions remain stronger in larger urban areas, particularly Metro Vancouver, owing to stronger economic and population growth. Price increases will be largest in northern B.C.

Key findings in the forecast include:

• The Bank of Canada won't raise interest rates until the first quarter of 2016.
  
• The posted five-year rate will hold below five per cent this year and will climb less than 50 basis points in 2016.
  
• The five-year rate will average 6.5 per cent in 2018.
  
• Excess new and existing home inventories have declined due to stronger demand and modest housing starts.
  
• High Vancouver prices will continue to rise due to the scarcity of developable land.

"I think sky-high prices in Greater Vancouver have more room to grow with little risk of a significant downturn," Yu says. "A key characteristic of the market has been the divergence between detached and multi-family prices. While condo markets have been soft, with median home values flat since 2010, detached values have surged. Single-family housing is increasingly a luxury good detached from income drivers."

Moderate growth in housing demand and lower new home inventory will contribute to a lift in housing starts of about two per cent this year to 28,900 units. Despite an improved backdrop for building, starts will trend only moderately higher through 2018, reaching 30,400 units in 2016 and 32,300 units by 2018.

Read the BC Housing Outlook.