Despite record prices, home sales in British Columbia will rise seven per cent this year compared to the last, according to a forecast report by a lender in the province.
Central 1 Credit Union said home prices will set a new record in 2011, with the median rising three per cent from last year to reach $402,000. Prices rose six per cent between 2010 and 2011. The forecast said the median will also rise one per cent in 2012, then four per cent in 2013.
Despite the uptick in sales from last year, the volume will remain below the peak levels seen between 2002-2007, said Central 1 economist and report author Bryan Yu. “Low but rising interest rates and tighter mortgage insurance rules will restrict sales for the next few years,” he said.
In the next couple of years, the lure of Vancouver pulling in new residents will slow, according to the report, with population rising 1.6 per cent this year and the next, then 1.4 per cent in 2013. International immigration will continue to rise over this time period, but it won’t be enough to offset interprovincial movement, especially to Alberta, said the report.
The biggest price gains this year will be in the Lower Mainland/Southwest, said the report, with a four per cent rise in the median in 2011, already coming off a nine per cent gain last year. Over the next three years, Cariboo and the North Coast will both see consecutive steady increases in median price, said the report.
Yu said the posted five-year fixed-term mortgage rates will range from an average 5.4 per cent in the first quarter to 5.9 per cent by the end of this year.
In terms of sales, multi-family home sales are expected to lead growth over the forecast period, especially in Metro Vancouver and the Capital region.
“In these regions, apartment condominiums comprise a more substantive component of the market, reflective of their relative affordability compared to single detached homes and proximity to transit hubs and amenities,” said the report.
By next year, there will be a renewed demand in recreational and retirement properties in the province as well, said the report.