BC home sales remained unchanged in August compared to July but with rising prices and increased mortgage interest rates, demand could weaken throughout the remainder of the year.
A total of 9,162 residential properties changed hands last month, up 2.4 per cent from the same period a year ago, according to the British Columbia Real Estate Association’s (BCREA) August 2017 data release published today.
Although strong economic conditions are underpinning demand, affordability issue could alter market activity going forward.
“Some headwinds are going to be faced going forward as a result of home price appreciation and modestly increasing interest rates,” BCREA’s Chief Economist Cameron Muir tells BuzzBuzzNews.
Last week, the Bank of Canada hiked the overnight rate, which influences the mortgage market, by 25 basis points to one per cent — a move that could impact consumers’ decisions to enter the market.
Muir does note that BC home sales could have been stronger last month, but wildfires in the province caused “a drop-off in buying activity.”
Last month, the average price of a home in BC was $678,186, a 19 per cent increase from $596,281 in August 2016.
In August 2016, the BC government implemented a 15 per cent foreign-buyer tax for Greater Vancouver, which caused fewer foreign buyers to enter the market and more local homebuyers to observe from the sidelines.
Muir adds that a year ago a smaller proportion of single-detached homes, particularly in the higher-end market, sold in the province, which also pulled down the average August 2016 price level.
Home prices in BC’s priciest market, Greater Vancouver, hit $982,454 in August, up roughly 18 per cent from a year ago.
Sales were also up in the region, totalling at 3,097 units, a 21.3 per cent increase compared to 2,554 units in August 2016.
A boost in sales was met with a rise in Greater Vancouver’s supply last month.
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The region had a total of 9,470 active listings in August, a 3 per cent increase from the same period last year.
Conversely, Kamloops saw a drop in active listings last month. In fact, it saw the biggest annual decline out of all boards included in BCREA’s data.
In August, a total of 1,278 units were active in Kamloops, representing a 25.2 per cent decrease from 1,708 units in August 2016.
“Kamloops market has been quite strong this year and certainly in solid seller’s market territory and rising prices have certainly been handed in this year in Kamloops,” says Muir.
Year-to-date, BC home sales dropped 15 per cent to 73,267 units in August compared to a year ago. Meantime, the year-to-date average price of a home was $706,839, down 1 per cent from August 2016’s year-to-date price.