A bump in December home sales capped off another strong year in 2017, just ahead of new stress-testing requirements on low-ratio mortgages that took effect on January 1.
B.C. Multiple Listing Service sales rose 4.9% from November to a seasonally adjusted 9,600 units, marking the highest level since June 2016. Real estate boards in the Fraser Valley, Vancouver Island, excluding Victoria, and Central/Southern Interior regions led a broad increase across the province. Annual sales fell 7.5% to 103,760 units but remained elevated.
A high-growth economy and low interest rates underpin sales, but tighter mortgage regulations and anxious buyers likely pulled sales forward. High-equity first-time buyers are most affected by the changes, which contributed to high sales in the condo market and suburban area activity. Expect the monthly sales flow to decline up to 10% over the coming months.
The average provincial price rose 0.1% to a seasonally adjusted $742,030, up 12% from a year ago. Relative to November, prices generally rose in most real estate boards. Sales composition matters when examining prices, because changes in detached and multi-family housing sales share can swing price trends. Nonetheless, the price trends heading into 2018 were positive in most areas – at or near record highs as healthy sales and low inventory fuelled seller’s-market conditions, specifically on Vancouver Island and in the Fraser Valley.
Housing price growth is set to decelerate, but a handoff in seller’s-market conditions to 2018 and a solid economic backdrop means those waiting for a significant price correction will likely be disappointed.
Meanwhile, October’s surge in international tourists to B.C. carried through November as the number of overseas visitors ramped up and U.S. visits remained strong. Total international visits reached a seasonally adjusted 494,025 persons during the month. While down 1% from October, levels in the most recent two months were about 5% above the mid-year trend and up 3% year-over-year.
U.S. travel to B.C. slipped 2.4% after an October jump, but has been rising since mid-2017 and consistent with early-2000s levels. Meanwhile overseas visits are showing some positive momentum after a mid-year lull, but remain near a record high. A competitive exchange rate, positive global growth, an expanding middle class in emerging markets and a volatile political climate in the U.S. are contributing to high demand for the “Canadian” experience. Through 11 months, tourist visits were up 3% from same-period 2016. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
