B.C. Multiple Listing Service (MLS) home sales fell again in January as federal mortgage regulation, provincial tax policy and eroding confidence in the housing market continued to drag on demand.
Provincial sales declined 1.8% from December to a seasonally adjusted 5,595 units – the market’s weakest pace since early 2013.
Lower Mainland sales fell 1% due to weakness in the Fraser Valley area, while double-digit percentage declines were observed in Victoria, Chilliwack, the South Okanagan and northern B.C. Unadjusted B.C. MLS sales fell 32.7% from same-month 2018 – the fewest January sales since 2013. Sales in the Lower Mainland were down nearly 38% year-over-year; declines in the rest of the province were 26%.
Lower demand and confidence is eroding prices. New listings picked up across the province in January, as some sellers may be trying their luck following evaporation of demand last year. This is adding to resale inventory and has translated to buyer’s-market conditions in the Lower Mainland and parts of the southern Interior. Firm conditions generally persist on Vancouver Island and in the north.
B.C.’s average price fell 3% from December to $674,042 and was down 7.5% year-over-year. The MLS housing price index (HPI), which adjusts for housing attributes, is down nearly 8% from mid-2018 highs in the Lower Mainland and 3% year-over-year. On the Island, HPI levels are above year-ago levels but have peaked and are edging lower. Housing prices are expected to erode further before stabilizing by mid-year.
Economic and labour markets remain firm, which should induce some buyers to jump in as prices ease.
Like their counterparts in most other provinces in December, B.C. manufacturers ended 2018 on a sour note. Sales plunged 3.1% from November to just under $4.48 billion in December, marking a sixth straight decline and the lowest point since February 2018. Year-over-year growth whittled down to 0.6%.
December’s soft manufacturing numbers reflected broad weakness among sectors. Wood products sales dropped by 6.1%, while paper sales and food product manufacturing also fell. These sectors accounted for the bulk of the decline. Recent manufacturing woes likely reflect pressure from a weakening export environment. Global growth concerns have curtailed commodity prices, affecting metal manufacturing sales.
Despite 2018’s weak second half, annual sales growth was strong at 7.9% compared with 9% in 2017. However, adjusting for generally higher product prices, real manufacturing output growth rose by an estimated 3%, which was the slowest since 2015.•
Bryan Yu is deputy chief economist at Central 1 Credit Union.
