The effects of stricter mortgage qualification rules – known as B20 guidelines – that came into effect January 1 have driven housing demand down across B.C and are expected to push housing sales down further this year, according to a new British Columbia Real Estate Association (BCREA) forecast.
Sales in Greater Vancouver are expected to fall 25.7% this year, according to the forecast, with unit sales reaching 27,200, compared with 36,604 units in 2017. The average MLS sales price is forecast to creep upward, however; the BCREA said it expects the average to reach $1,050,000 – a 1.9% increase compared with $1,030,000 last year.
Across the province as a whole, sales are expected to fall 21% to 82,000 units. Decreases are forecast in all regions except in the northern part of the province, where sales are expected to rise 1.9%. The average B.C. sales price is expected to increase 1.9% to $723,200.
“The B.C. housing market is grappling with a sharp decline in affordability caused by tough B20 stress test rules for conventional mortgages,” BCREA chief economist Cameron Muir said.
“While these rules have had a negative effect on housing demand across the country, the impact has been especially severe in B.C.’s large urban centres because of already strained housing affordability.”
The new mortgage policies have pushed demand downward, but there are other factors at play that will lead to a rebound – if only a slight one – in the marketplace, according to the forecast. Demographics are favourable with a large number of younger British Columbians entering their “household-forming years.” As well, unemployment is low, pushing wages higher and leading to stronger wealth and confidence for households.
The BCREA said it expects sales in 2019 will rise 1.3% in greater Vancouver and 8.2% across the province, with small increases in average sales prices as well (3.3% and 5.3%, respectively).