The price of homes in British Columbia will continue to increase over the next two years, according to an RBC forecast released August 19, but the rate of growth will slow by the end of 2016.
Home sale prices across Canada will also rise in both 2015 and 2016, at rates of 4.6% and 3.2%, respectively. This slight deceleration will be dependent on an increase in interest rates over the period, RBC said in its forecast.
“Our base case scenario is that the Bank of Canada will begin to remove monetary stimulus by the middle of 2016 and raise the overnight rate by 75 basis points to 1.25% during the second half of next year,” the bank said in the forecast.
Nationwide increases will be driven by price growth in B.C. and Ontario, specifically Vancouver and Toronto.
“Affordability – and therefore, valuation – conforms to historical norms in virtually every other market in Canada, thereby suggesting little in the way of widespread excessive valuation across the country.”
Consistent with what has been seen thus far in 2015 , detached homes will take the lead in terms of price growth, RBC said.
“[In Vancouver and Toronto], affordability is most stretched for single-detached homes, whereas affordability of condominium apartments is just a little worse than it has been on average over the past 30 years.”
The average home sale price is forecast to be $595,200 across the province for 2015 as a whole – up 7.8% compared with $552,300 in 2014. Through 2016, the average price will continue to grow, but the increase for that year will slow to 4.9% with the price reaching $624,600.
The number of homes sold in B.C. will be up 20.5% by the end of this year when compared with last year. In 2014, 84,000 homes were sold. The forecast for total sales in 2015 is 101,200 units. In 2016, this will fall by 4.8%, RBC forecasts, to 96,300 homes.
Housing starts are expected to follow a similar pattern. A total of 33,100 starts in B.C. for this year is expected in the province – up 16.7% compared with last year. In 2016, starts will fall 6.3% to 31,000 units.