B.C. home prices expected to drop
Industry association’s chief economist points to foreign buyer tax as one factor
Following a year of double-digit increases, the B.C. Real Estate Association is predicting average home sales prices will drop by as much as 8.7 per cent next year in the Vancouver area and across B.C.
The prediction, included in the B.C. Real Estate Association’s newest quarterly Housing Forecast Update released Tuesday, marks the first time in five years the industry association for the province’s 20,000 realtors has predicted a year-overyear decrease in average Multiple Listing Service prices for Greater Vancouver and B.C.
The new forecast predicts the average MLS price of Greater Vancouver home sales will decrease by 8.7 per cent next year. That marks a 14.5 per cent drop from the association’s previous forecast for 2017 — the most recent quarterly update, published in late August, predicted Greater Vancouver would see a 5.8 per cent increase in average MLS price in 2017.
The provincewide average price prediction has dropped from a 5.2 per cent increase for 2017 (as predicted in late August) to a 6.4 per cent decrease for 2017 (in Tuesday’s forecast).
Cameron Muir, chief economist for the B.C. Real Estate Association (BCREA), said: “Home sales in Vancouver peaked in February this year and they’ve declined ever since, that’s been exacerbated by some of these policy measures, particularly the foreign buyer tax.”
Housing demand will still be above average in 2017, Muir said, adding: “We expect the downside of the foreign buyer tax, particularly in Vancouver, has largely run its course, and we can see in the data today, the proportion of foreign sales are actually starting to increase again.”
Average sale prices, which incorporate different kinds of dwellings, are affected by the changing mix of “products” in the transactions, Muir said, as detached homes make up a smaller proportion of sales in Vancouver.
BCREA does not make previous forecast reports available online, but Muir said the last time the association predicted year-over-year declines in average prices was 2011, when quarterly reports forecast decreases between roughly one and 3.5 per cent for 2012.
BCREA spokesman Damian Stathonikos did not reply before deadline to a request to see the 2011 forecasts.
The 14.5 per cent price-forecast adjustment between the last two BCREA forecasts marks “a pretty significant development,” said Andrey Pavlov, a professor of finance at the Simon Fraser University’s Beedie School of Business.
“We have to consider the source,” Pavlov said. “This is basically an industry group, and they have incentives to paint the real estate market in the best terms possible. With this in mind, if they’re forecasting a decline, then in my view things are probably pretty bad.”