Housing market stabilizes
January 21, 2019
The average sale price of Canadian homes is expected to increase by 1.7 per cent next year, according to the Re/Max 2019 Housing Market Outlook. Most housing markets across the country stabilized in 2018, after the unprecedented increases in average sales price that many markets experienced in 2017.
However, there continues to be some exceptions to the 2018 average sales price gains, particularly in areas outside of the main city centres, such as Chilliwack (BC) and Windsor (ON), which saw 13 per cent gains, London (ON) with 17 per cent and Charlottetown (PEI) with 11 per cent.
In British Columbia, reduced foreign buyer activity has opened up more opportunity for local buyers in Greater Vancouver’s condo market. While average residential sale prices for all properties increased by two per cent, from $1.03 million in 2017 to $1.04 million in 2018, the number of sales dropped by 30 per cent. The low absorption rate is expected to bring down average residential sale prices in 2019 by three per cent.
Similarly, the number of sales year-over-year has dropped by 33 per cent in Kelowna. Rising interest rates, government policy changes and the mortgage stress test were all factors that contributed to the decline, which is expected to continue into 2019.
Average residential sale prices increased by six per cent year-over-year from $674,930 in 2017 to $718,915 in 2018, with prices expected to decrease by three per cent in 2019.
“The drop in sales in key markets across British Columbia can be partially attributed to Canadians’ increasing difficulty in getting an affordable mortgage in the region,” says Elton Ash, regional executive vice-president, RE/MAX of Western Canada.
“The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market.”
Canadians may be feeling the pinch of higher interest rates as they move forward with their home-buying plans into 2019 and it is anticipated that the market will continue to stabilize.
While a recent survey revealed 31 per cent of Canadians said higher interest rates have not affected their ability to get an affordable mortgage thus far, this is expected to change next year. A separate survey of Re/Max brokers and agents found 83 per cent predict rising interest rates will make it more difficult for Canadians to purchase a home in 2019.