Rosier days may be ahead for B.C.’s real estate market, with the provincial government predicting on Thursday a rebound in sales activity in 2024.
However, those hoping for lower home prices shouldn’t hold their breath as home prices are expected to rise by 2.3 per cent this year, in addition to a further 2.9 per cent in 2025, according to forecasts included in the B.C. government’s latest budget.
Home sales are also projected to rise by 10.2 per cent this year, followed by an increase of 7.1 per cent in 2025 as the negative impacts of higher interest rates fade.
This past year home sales fell to their “lowest level in a decade” and were down by 9.2 per cent when compared to 2022. In Metro Vancouver, sales fell by 10 per cent with the Fraser Valley recording a decline of 4.1 per cent.
“B.C. housing markets have been responding to the impacts of the monetary policy tightening. While home sales picked up in the first half of last year when the Bank of Canada paused interest rate increases, sales began to slow in the second half of the year as the Bank resumed hiking interest rates in June and July,” said Budget 2024.
The budget introduces and expands on tax measures aimed at helping first time buyers enter the market in addition to providing funding for programs like BC Builds.
The average home price in the province was 2.6 per cent lower in 2023 when compared to the year prior. The budget stated affordability challenges remain thanks to higher mortgage rates and “still-elevated home prices.”
Homebuilding activity eased in 2023 as the total number of building permits fell by 16.5 per cent when compared to 2022. This signals potential moderation in construction activity going forward, according to the province.
“Furthermore, in 2023, the unsold inventory of newly completed homes was higher in the [census metropolitan areas] of Vancouver, Victoria and Abbotsford compared to 2022,” the budget stated.
Housing starts totalled 50,490 units in 2023, representing the highest annual pace on record and is 8.1 per cent higher than 2022. When broken down, single-family home starts fell by 29.7 per cent but was offset by a rise of 18.2 per cent for multi-family housing.
It is projected that home starts will decrease to approximately 46,100 units this year, “reflecting the impacts of higher interest rates, increased construction costs, skilled labour shortages, as well as the broader economic slowdown.”
Starts are then expected to increase to roughly 47,300 units in 2025, and average around 50,500 units per year between 2026 and 2028.
