The president of the Greater Victoria Real Estate Board predicts that low housing inventories will lower sales, but raise prices in 2017.
Mike Nugent offered this prediction in an interview looking ahead to the coming year after a record-setting year in 2016.
The local housing market is currently experiencing an upward cycle thanks to a number of factors including B.C.’s strong economy and net migration into the province among other factors, he said.
“However, we have a real shortage of inventory for sale in Victoria,” Nugent said.
One measure of this ongoing shortage? Last year, 25 per cent of listings sold over the asking price, said Nugent. Buyers, in other words, were eager to get into the market, and the continued shortage of inventory will mean fewer sales at higher prices.
Overall, he predicts that sales will drop by nine per cent, with prices edging up to reflect the lower supply.
Other sources paint a similar picture. The Re/Max Market Outlook 2017 predicts that the Greater Victoria market will remain a popular destination for buyers.
“Market conditions,” it notes, “have continued to favour sellers with any listing under $650,000 receiving multiple offers. There is approximately three months of inventory on the market across all property types.”
Looking at prices, the report forecasts that the average residential sale price for the area covered by the Greater Victoria Real Estate Board will be around $590,450 – up from $580,961 in 2016. That figure in turn had risen 12 per cent from $518,153 in 2015.
Saanich — like the rest of the Greater Victoria — will be subject to these trends.
“I don’t think there is a slowdown in the demand for Saanich houses,” he said. “The market is still very strong.”
One specific area of uncertainty concerns interest rates and their effects on mortgages. While many experts predict rising interest rates in the United States — which would impact the Canadian economy in a number of ways such as the dollar exchange rate — Canadian interest rates have remained (for now) relatively flat.
“So it is really hard to tell,” said Nugent, with the proviso that interest rates make up a small piece of the puzzle.
Government intervention, he said, could also have unexpected results.
British Columbia has already seen such an event this summer, when the provincial government announced a local tax on foreign buyers in the Vancouver area, a move that has seen property sales plunge in the affected area, but rise elsewhere, including Victoria, as buyers look for alternatives.
In a recent release, VREB simultaneously acknowledged but downplayed the effect. “While October data shows an increase in foreign buyers into the Capital Regional District compared to previous months, their 6.3 per cent of property transfers indicate that these buyers are one factor in the marketplace,” it read. “A much larger factor affecting affordability and availability right now is the lack of inventory. An effective method to address housing affordability issues could be through efforts to increase the supply of housing, either through adjustments to zoning or density.”
Nugent used the occasion to reiterate the board’s opposition to a foreign-buyers tax for the Victoria area.
“I’m really hesitant to recommend a foreign-buyers tax unless I see some of the additional issues, the vacant homes, that kind of thing they have seen in Vancouver.”
In the long-term, everything points towards rising housing prices, for the simple reason that the area lacks developable real estate. “We cannot meet the supply,” said Nugent. “We are surrounded by water.”
