B.C. housing market, population post gains

Annual July-over-July population growth in B.C. remained moderate in 2019 with the province growing by 70,170 persons or 1.4%. While decelerating from a 1.6% gain in 2018, this was consistent with national growth.

International migration continued to underpin gains, reflecting higher targeted levels of Canadian immigrant intake and attractiveness of B.C. to newcomers. Excluding temporary residents, net international migration to the province rose to 31,750 persons, which was up slightly from 2018.

Following fewer inflows from 2011 through 2015, net flows have exceeded 30,000 in three of the last four years. Adding to this has been the surge in net non-permanent residents, which remained exceptionally high at 27,243 persons due to high levels of international students and work permits. Persistent labour shortages and low unemployment rates have driven the latter.

In contrast, net interprovincial migration declined for a third straight year.

Relative economic conditions drive interprovincial flows. B.C.’s economy will likely fare better than its Prairie neighbours in the coming years, while major project construction will attract labour to the province. Net natural population growth (births less deaths) fell sharply to 5,060 persons in 2019 as the number of deaths has increased with an aging population.

The Lower Mainland housing recovery continued through September. Year-over-year Multiple Listing Service sales in the combined Metro Vancouver and Abbotsford-Mission region rose 40% to 3,646 units. While largely reflecting poor sales a year ago, the trend is normalizing. We calculate a seasonally adjusted increase of about 8% from August, which would mark a fifth increase in six months. This would be bang on with the 10-year average, but still 20% below levels observed prior to federal stress tests.

Price trends remain soft.

The average price rose 0.1% from August to $884,677 but fell 3.3% year-over-year. The benchmark value, which adjusts for housing attributes, fell 0.4% from August to mark a fifth straight drop, with a decline of 6.4% year-over-year and 9% from the peak in mid-2018. Year-over-year declines have been consistent across home types.

That said, market conditions have firmed and downside risk to prices is abating. 

Stronger sales, low inventory, a tight labour market, low mortgage rates and population growth will support prices, with an upward trend emerging in 2020. The recently launched federal shared equity mortgage plan available to qualified buyers will also support demand. That said, any gains are expected to be shallow and aligned with inflation. 

Bryan Yu is deputy chief economist at Central 1 Credit Union.