Advertisement 1

Metro Vancouver home sales prices predicted to drop next year

Following a year of double-digit increases, the B.C. Real Estate Association is predicting average home sales prices will drop by as much as 8.7 per cent next year in the Vancouver area and across B.C.

Get the latest from Dan Fumano straight to your inbox

Article content

Following a year of double-digit increases, the B.C. Real Estate Association is predicting average home sales prices will drop by as much as 8.7 per cent next year in the Vancouver area and across B.C.

The prediction, included in the B.C. Real Estate Association’s newest quarterly Housing Forecast Update released Tuesday, marks the first time in five years the industry association for the province’s 20,000 realtors has predicted a year-over-year decrease in average Multiple Listing Service prices for Greater Vancouver and B.C.

Advertisement 2
Story continues below
Article content

The new forecast predicts the average MLS price of Greater Vancouver home sales will decrease by 8.7 per cent next year. That marks a 14.5-per-cent drop from the association’s previous forecast for 2017 — the most recent quarterly update, published in late August, predicted Greater Vancouver would see a 5.8-per-cent increase in average MLS price in 2017.

Article content

The provincewide average price prediction has dropped from a 5.2-per-cent increase for 2017 (as predicted in late August) to a 6.4-per-cent decrease for 2017 (in Tuesday’s forecast).

Cameron Muir, chief economist for the B.C. Real Estate Association (BCREA), said: “Home sales in Vancouver peaked in February this year and they’ve declined ever since, that’s been exacerbated by some of these policy measures, particularly the foreign buyer tax.”

Cameron Muir, the B.C. Real Estate Association’s chief economist.
Cameron Muir, the B.C. Real Estate Association’s chief economist. Photo by Handout /PNG Files

Housing demand will still be above average in 2017, Muir said, adding: “We expect the downside of the foreign buyer tax, particularly in Vancouver, has largely run its course, and we can see in the data today, the proportion of foreign sales are actually starting to increase again.”

Article content
Advertisement 3
Story continues below
Article content

Average sale prices, which incorporate different kinds of dwellings, are affected by the changing mix of “products” in the transactions, Muir said, as detached homes make up a smaller proportion of sales in Vancouver.

BCREA does not make previous forecast reports available online, but Muir said the last time the association predicted year-over-year declines in average prices was 2011, when quarterly reports forecast decreases between roughly one and 3.5 per cent for 2012.

BCREA spokesman Damian Stathonikos did not reply before deadline to a request to see the 2011 forecasts.

The 14.5 per cent price-forecast adjustment between the last two BCREA forecasts marks “a pretty significant development,” said Andrey Pavlov, a professor of finance at the Simon Fraser University’s Beedie School of Business.

“We have to consider the source,” Pavlov said. “This is basically an industry group, and they have incentives to paint the real estate market in the best terms possible. With this in mind, if they’re forecasting a decline, then in my view things are probably pretty bad.”

Advertisement 4
Story continues below
Article content

This week’s BCREA forecast predicts unit sales will decrease by 15.4 per cent next year, following two years of double-digit percentage increases.

Tom Davidoff, an associate professor at UBC’s Sauder School of Business, said: “We’ve lived through one heck of an upswing, it would be natural to see some slowdown a little bit from there.

“When you head into a downturn, typically you see sales volumes fall before prices,” he said. “There’s been a massive decline in volume and a moderate decline in prices so far, and it’s reasonable to infer that we’re going to see, given how bad the decline in transactions has been, that we’re going to start to see a more meaningful decline in prices.”

dfumano@postmedia.com

Twitter.com/fumano

CLICK HERE to report a typo.

Is there more to this story? We’d like to hear from you about this or any other stories you think we should know about. Email vantips@postmedia.com.

Recommended from Editorial
  1. The number of foreign purchasers involved in Metro Vancouver residential real estate transactions increased from September to October, as the market continues to digest the 15 per cent additional tax applied to sales by non-Canadian buyers as of August 2.
    More foreign buyers involved in Metro Vancouver residential real estate transactions in October
  2. Sadhu Johnston, Vancouver's city manager, is defending his proposed 2017 budget that features big increases in spending and tax and fee hikes that outstrip inflation.
    Demand on city services prompts proposed property tax hike
  3. Rick Perreault, CEO of Unbounce.
    Vancouver's high cost of living could crimp high-flying tech sector, report suggests
  4. Kris Klaasen has owned his corner house in Kitsilano since 1982, when he bought it for $126,000. Today it could fetch more than $2.4 million, he’s been told.
    Douglas Todd: Is real estate foreign buyers tax the 15 per cent solution?
Article content
Comments
You must be logged in to join the discussion or read more comments.
Join the Conversation

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Latest National Stories
    This Week in Flyers