|By Marketwired .||
|July 3, 2014 09:01 AM EDT||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/03/14 -- Over the next few years, B.C.'s housing market is expected to post stronger sales and rising prices but remain only a modest source of growth for the provincial economy, according to Central 1 Credit Union's B.C. Housing Forecast, released today.
"Price growth is expected to average less than three per cent a year through to 2017 as higher borrowing costs and stricter mortgage insurance policies weigh on affordability," said Bryan Yu, the Central 1 economist who wrote the forecast. "The strongest gains in B.C. will be in the Lower Mainland and Northern B.C. regions. Excess supply and subdued demand hold back price growth in the interior and island markets."
B.C.'s economy will expand by less than 2.5 per cent this year, but is forecast to make some steady gains, averaging more than 3.5 per cent from 2015 to 2017. "Despite a rising rate mortgage environment, the stronger economic outlook is expected to drive consumer confidence, income and employment," said Yu.
The housing market, however, remains mixed. While mortgage rates will be a sales drag over the forecast period, lower borrowing costs have boosted B.C.'s market this year, particularly in the detached housing sector in the Lower Mainland market. However, overall activity have disappointed with provincial sales below the 10-year average.
The loss of B.C. residents to Alberta and Saskatchewan is expected to reverse in 2015, with an inflow of landed immigrants and Canadians from throughout the country driving demand for new homes. In the meantime, housing starts will remain steady, despite a burst of activity early in the year where urban markets posted a 14 per cent year-to-date gain through May.
-- B.C.'s economy will expand by less than 2.5 per cent this year, but is forecast to average more than 3.5 per cent from 2015 to 2017. -- Median home prices continue to climb, with growth expected to average less than three per cent per year through 2017 to $429,000. -- Annual housing starts are forecast to hold steady at about 27,200 units this year and are on pace for an average of 30,000 units by 2016. Housing starts will trail household formation, which are forecast to average about 31,000 from 2014 to 2017, drawing down on excess supply of inventory. -- Average mortgage rates are forecast to trend upwards to about 5.5 per cent by the end of 2015 and edge upwards to 5.75 per cent by 2017. -- Rising interest rates and mortgage-tightening policies will price some first-time buyers out of the market, spurring rental demand, though rental-market construction is expected to remain range-bound. -- Northern B.C.'s housing markets outpaces the province, with stronger port activity and pre-construction related to LNG projects.
The full report BC Housing Forecast 2014-2017 is available here.
About Central 1
Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Owned primarily by its member credit unions, 43 in B.C. and 88 in Ontario, Central 1 represents a consumer-oriented, full-service retail financial system that serves 3.2 million members and collectively holds $92.0 billion in assets.
With offices in Vancouver, Mississauga and Toronto, Central 1 provides liquidity management, direct banking and payment service solutions as well as a wide range of trade services. For more information, visit www.central1.com.