Tough new mortgage rules are being blamed for a sharp drop in the number of housing sales across the province.
Today, the B.C. Real Estate Association predicted that residential sales would fall 21 percent by the end of 2018—from 103,768 units last year to 82,000 this year.
That would take a big bite out of commission income for B.C. real-estate agents.
“The B.C. housing market is grappling with a sharp decline in affordability caused by tough B20 stress test rules for conventional mortgages,” BCREA chief economist Cameron Muir said in a news release. “While these rules have had a negative effect on housing demand across the country, the impact has been especially severe in B.C.’s large urban centres because of already strained housing affordability.”
This year's largest forecasted drops in sales are in the Fraser Valley (down 26.3 percent) and Greater Vancouver (down 25.7 percent). Sales are expected to increase by 1.9 percent in northern B.C. in 2018.
Slower sales would also seriously affect B.C. government revenue through the property-transfer tax.
Finance Minister Carole James has forecast that this tax will generate more than $2.1 billion in this fiscal year ending on March 31, 2019. But through the first six months of 2018, it raised less than $900 million.
The BCREA predicted that housing sales will rise eight percent in 2019 to 88,700 units. Greater Vancouver housing sales are expected to increase by 13 percent in 2019.
The multiple-sales-listing price of homes across B.C. is anticipated to go up 1.9 percent this year across B.C. and in Greater Vancouver. In 2019, MLS prices are expected to increase 5.3 percent across B.C. and 3.3. percent in Greater Vancouver.
The report noted there are strong fundamentals driving the housing market, including low unemployment, which is putting upward pressure on wages.
In addition, the news release pointed out that the millennial generation is entering their household-forming years.
The report stated that the "pullback" in housing sales is "helping alleviate a chronic shortage of supply".
"After trending at decade lows last year, active listings in the province were up nearly 20 per cent in July," it said. "Even the supply-strapped Vancouver market has experienced a 30 per cent increase in active listings over the past year."