BC housing markets return to balanced territory thanks to softer demand
It’s been approx. 6 months since the stricter mortgage regulations took effect, and we are now starting to see the aftermath in the BC housing market. The housing demand in BC continued to soften in June, pushing most markets into more balanced territory.
Last month, a total of 7,884 homes sold across the province, which is a 32.5 per cent decrease from 11,672 units sold a year ago, according to the latest data from the British Columbia Real Estate Association (BCREA).
“What we’re seeing in the market right now is almost purely the impact of new mortgage rules,” Brendon Ogmundson, BCREA deputy chief economist.
On January 1st, the Office of the Superintendent of Financial Institutions (OSFI) implemented a new stress test for uninsured mortgages, to ensure buyers can withstand rising interest rates. Since the new policy came into effect, it has been linked to a slowdown in activity both across BC and the country.
In June, declining sales persisted in Greater Vancouver, which is BC’s priciest housing region. With 2,467 home sales last month, it has come down roughly 38 per cent from 3,953 homes sold last year in June 2017.
As demand continues to decline, Ogmundson says that most of BC’s housing markets are returning to balanced territory.
“What we’re seeing in the market is that the level of listings is up a little, so supply is starting to accumulate but from historically low standards, while demand is off a fair amount. And therefore, markets are somewhat balanced on a supply and demand basis.”
Last month, there were a total of 35,932 homes listed for sale across the province, up 21 per cent from a year ago.
As most markets are sitting in balanced territory, there was less upward pressure on prices last month. In June, the average price of a home in BC was $716,326, which is a 1.3 per cent decline from the same time last year.
In Greater Vancouver, the average price of a home hit $1,068,559 in June, up 1.4 per cent from a year ago.
Looking ahead, Ogmundson says the impact of the stress test should start to fade away, allowing BC housing markets to recover over the next six to 12 months. The economist forecasts that sales will pick up across the province in the coming months and prices will continue to experience moderate growth.
Article Source: livabl.com