BC Home Sales Forecast to Rise Through 2016
The BC economy is expected to expand by 2.7 per cent both this year and next, after an estimated 2.3 per cent in 2014. Stronger employment growth will be tied to reinvigorated consumer spending, rising export demand and population growth. The rebound in retail sales experienced last year is expected to continue through 2016 as confident consumers take advantage of low fuel costs and rock bottom interest rates. Moreover, a relatively weak dollar is expected to help draw a sizable contingent of US tourists and induce many staycations on this side of the border.
Exports to the US are also rising alongside increasing domestic demand and a favourable exchange rate. Meanwhile, increasing international net-migration is being bolstered by a positive inflow of migrants from others provinces. After a year in which housing demand climbed significantly in the province, the retrenchment of oil prices is expected to attenuate housing demand in some regions while bolstering it in others.
While lower energy prices are positive for BC consumers overall, second home purchases by Albertans will likely edge back in regions like the Okanagan and the Kootenays. However, many Albertans near retirement may choose to cash out now and move to popular senior communities like Parksville or Penticton. Some BC communities where a significant number of households work in Alberta may also be negatively impacted.
However, housing demand in the Lower Mainland is typically stronger after a sharp decline in oil prices. Stronger consumer demand will keep home builders busy through 2016. After rising 4.8 per cent in 2014, BC housing starts are forecast to increase a further 1.9 per cent to 28,900 units this year and a further 1 per cent to 29,200 units in 2016. The expansion of the housing stock in the province is keeping pace with overall population and household growth.
Market conditions around the province are expected to remain in relative balance this year, with a level field of demand and supply. However, some communities and particular neighbourhoods may experience periods of oversupply or undersupply. Consultation with a REALTOR® regarding specific local market conditions is advised.
The average MLS® residential sales price is forecast to rise 4.5 per cent to $594,000 this year, with most of the upward pressure being exhibited in the South Coast. Elevated consumer demand is expected to be partially offset by resale inventories and additions to the housing stock in 2016. As a result, the average MLS® residential sales price is forecast to increase an additional 2.4 per cent to $608,500 next year.