B.C. retail spending at bricks-and-mortar stores posted a surprisingly strong gain in September.
Total dollar-volume sales rose 1.7% from August to $7.79 billion and outpaced Canadian growth of 1.1%. Unadjusted retail spending in B.C. was up 11.2% year-over-year compared with 3.9% in August.
Metro Vancouver underperformed with sales up 0.9% from August and 8.1% year-over-year. Growth in B.C. reflected higher vehicle sales and increased ancillary spending on housing-related expenditures.
With the latest gain, year-to-date retail spending is down a negligible 0.4%. The pandemic’s second wave and increased social restrictions are likely to weigh on retail spending in the fourth quarter, but full-year sales are on pace for a 1% gain.
Robust housing market activity in the pandemic era continued through October despite signs that the upward cycle in sales has crested. B.C. Multiple Listing Service home sales reached 10,408 units. While down 1.7% from September, sales were 55% above pre-pandemic February and were among the highest since mid-2016. Unadjusted sales rose 45% from same month-2019.
Despite elevated unemployment, strong housing demand is supported by low mortgage rates, high savings rates during the pandemic and steady employment for mid-to-high income earners. The pandemic has also triggered a shift in preferences, with households trading condos for ground-oriented units, both within their locality and farther afield in smaller urban areas.
Regionally, sales were mixed. Fraser Valley Real Estate Board sales rose for a sixth straight month, reflecting the flow of individuals from the core Vancouver region in search of large properties. In contrast, sales fell 4.1% in the Greater Vancouver Real Estate Board areas, 10% in Chilliwack and 8% on the Island outside Victoria.
Year-to-date home sales growth reached a fevered 16% through the first 10 months.
With markets favouring sellers, home prices remain on a tear as buyers bid up prices to secure properties. The average price came in a $811,370 in October, down 0.5% from September, but up 12% year-over-year.
Further price growth is anticipated given the imbalance between sales and listings and the underlying price momentum. The pandemic’s second wave could temporarily stall sales, although listings would also be anticipated to pull back, limiting its effect on prices. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.