B.C.’s weather is not the only thing cooling down in the coming months.
Home sales are expected to be muted for the rest of 2023 due to high inflation and a Bank of Canada overnight rate that has remained steady at five per cent.
That’s according to the British Columbia Real Estate Association’s (BCREA) fourth-quarter forecast released Wednesday (Oct. 25).
Residential sales in the province are expected to decline 4.8 per cent to 76,700 units sold by the end of 2023 compared with total sales from last year. Sales are then expected to rise by 4.8 per cent in 2024 for an estimated 80,375 units sold by the end of next year.
Metro Vancouver is expected to finish off 2023 with the most sales across the province (about 28,000 units), followed by the Fraser Valley with roughly 14,500 units sold.
“Activity in the B.C. housing market has mirrored movements by the Bank of Canada over the past two years,” BCREA chief economist Brendon Ogmundson said in a statement.
“As such, there is little reason to believe that sales will meaningfully detach from the anchor that is monetary policy over the next year. Thankfully, it appears that the [Bank of Canada] is at, or at least very near, the end of its tightening cycle and may begin lowering its policy rate late next year.”
The Bank of Canada held its key rate at five per cent Wednesday but indicated that there is the potential for more interest rate pain in the future.
“With clearer signs that monetary policy is moderating spending and relieving price pressures, governing council decided to hold the policy rate at five per cent and to continue to normalize the Bank’s balance sheet,” the central bank said in a statement.
“However, governing council is concerned that progress towards price stability is slow and inflationary risks have increased and is prepared to raise the policy rate further if needed.”
B.C. had just over 30,000 listings as of September 2023. This falls short of the 45,000 active listings that the BCREA associates with a healthy and balanced market.
The average price for a home is expected to decrease by 1.9 per cent to $977,000 by the end of 2023 compared with 2022. The BCREA then expects average prices to rise by 1.6 per cent to $992,900 in 2024.
