The British Columbia housing market will slow this year and total sales will drop slightly from 2010, says a new report released today by Central 1 Credit Union.
Total home sales are forecast to reach 88,200 units by the end of this year, a slight decline of less than one per cent from 2010. Resale home transactions are forecast to end the year 4.7 per cent ahead of 2010, but new home transactions will lag by 26 per cent.
While sales will remain soft, the median price will rise 6.8 per cent to $417,000, says economist Bryan Yu.
“The real estate market will remain stable for the next couple years, weighed down by global economic issues, moderate employment and population growth and changes to mortgage insurance rules,” Yu said.
Next year total home sales are expected to increase by about 3.4 per cent, driven by higher new home sales, while resales of existing homes will decline.
But home sales are unlikely to drop dramatically because mortgage rates remain at record lows, maintaining home affordability, the report says.
Plans to remove the Harmonized Sales Tax (HST) and return to a Provincial Sales Tax/Goods and Services Tax regime will probably result in some home buyers delaying purchases until 2013.
“People looking at new homes priced over $525,000 may very well wait until the tax changes lower the 12 per cent hit they face,” Yu said.
Yu says concerns about a possible dramatic price drop in Vancouver are overblown.
“Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust,” Yu said. “As well, price jumps that have received media attention have been in localized areas and we have not seen a region-wide price surge.”
The inventory of new and resale homes is not high so is not likely to lead to a substantial price drop.
