Weak housing sales continued through September. B.C. Multiple Listing Service sales declined 33% year-over-year, to 5,580 units. While this decline was deeper than August’s 26% drop – on a seasonally adjusted basis – sales were virtually unchanged from August at 6,357 units and have stabilized since June.
Seasonally adjusted sales rose in the Fraser Valley, northern B.C. and Victoria markets but were offset by declines in the south Okanagan, Kamloops, Kootenay and Metro Vancouver regions.
The initial shock of rules requiring potential homebuyers to undergo a mortgage “stress test” – has run its course since being introduced in January. Nevertheless, the policy has lowered sales, particularly in higher-priced urban markets like Vancouver. B.C.’s sales downturn was further deepened by provincial measures to dampen demand, including an increase in the foreign-buyer tax and introduction of a speculation tax.
The Lower Mainland, Thompson Okanagan and Vancouver Island markets have experienced the sharpest erosion in demand.
Sluggish sales are contributing to higher resale inventories. Active listings are up 30% since the beginning of the year, despite a steady flow of new listings. While the market still remains constrained by supply and favours sellers in most areas of the province, conditions have softened. A buyer’s market has emerged in the south Okanagan and a few other southern Interior markets. Conditions in Greater Vancouver and Chilliwack are balanced, although momentum has been negative.
The average provincial price rose 1.7% from August to a seasonally adjusted $723,700. Price levels have held range-bound for the past year. Composite benchmark values are declining in the Metro Vancouver region and have crested in Victoria. The rest of Vancouver Island continues to show an increasing trend.
Subdued market conditions will continue as federal and provincial policies couple with rising interest rates to limit demand.
B.C. manufacturing sales, meanwhile, were steady in August but continued to trend well above last year’s levels. Shipments partly rebounded from a July dip to reach $4.75 billion, marking a 0.6% month-to-month increase. This compared to a national decline of 0.4%, which was partly attributable to an auto-induced drop of 2% in Ontario. With year-over-year growth of 10%, B.C. sales ran slightly ahead of the national pace, albeit mid-pack among the provinces.
Manufacturing sales growth has remained healthy at 10% year-to-date, tracking slightly above last year’s growth and indicative of an expanding sector. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
