Resilience in High-End Markets Supports British Columbia’s Average Prices

Source: Western Investor

A scarcity of available listings is contributing to the sustained high prices of houses in British Columbia. However, the provincial real estate association suggests that additional factors could lead to a potential 2% decrease in prices within this year.

“The BC housing market has shown remarkable resilience in 2023, with both home sales and prices holding their ground despite significantly higher interest rates.”

Brendon Ogmundson, the Chief Economist at the BC Real Estate Association

In its quarterly housing outlook published on August 29, the BCREA pointed out that due to extremely limited inventory, housing prices have continued to rise through much of the year, even as overall sales have fallen short compared to the previous year. This rise has been primarily driven by activity in the higher-priced markets, where buyers have remained engaged despite a decline in listings.

Greater Vancouver has witnessed an increase in sales both in terms of value and volume since May, with benchmark pricing experiencing rapid growth until April, after which it slowed down. The benchmark value for all MLS sales in the Real Estate Board of Greater Vancouver area currently stands at $1.2 million, the same as a year ago.

BCREA forecasts that if the current trends persist, reduced buyer activity could result in an average resale house price decline of 2% to $976,600 province-wide.

Anticipating a return to more typical levels of activity as buyers adjust to the new interest rate environment and a new year commences, the outlook suggests that even though rate cuts may not occur until mid-2025, a normalization of the market is expected.

“As home sales return to their usual levels next year, we project prices to rise by 2.4%, reaching an annual average just above $1 million. However, there’s a potential for higher price growth given the housing supply situation,”

the report states.

Greater Vancouver is projected to maintain its status as the priciest market in the province in 2024, with an average resale price of $1.3 million. Meanwhile, the BC Northern region is anticipated to experience the most substantial value increase at 4.8%, resulting in an average sale price of $435,000. Kamloops and District closely follow with a value growth of 4.2%, reaching an average of $615,000.

BCREA’s analysis underscores the significance of supply in influencing pricing, highlighting the need not only for more listings but also a wider range of housing types, encompassing both resale and new properties.

Nevertheless, residential land sales have experienced a sharp decline this year, indicating sustained supply limitations in the foreseeable future, even as the province mandates construction targets for municipalities to meet housing demand.

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