The British Columbia Real Estate Association (BCREA) says higher interest rates are dampening demand for residential properties, resulting in fewer sales and some regions in the province flipping from a sellers’ market to a buyers’ market
“While a still growing economy and robust population growth point to strong demand, it is increasingly difficult to satisfy that demand at current interest rates. As a result, sales activity across the province, but especially in more expensive markets, continues to slow,” said BCREA chief economist Brendon Ogmudson in his monthly market update for June.
Year-to-date (January to June) data shows residential sales dollar volume is down 17% to $53.5 billion compared with the same period in 2021. Likewise, residential unit sales were down 27.6% to 51,202 units, noted BCREA.
Meanwhile, comparing June 2022 to June 2021, the average residential home price was up 14% to $1.05 million.
However, while prices are up year over year, they have fallen precipitously in some regions since February, when inflation concerns became more pressing.
Average home sale prices in the Fraser Valley have dropped 20% in just four months, from $1.29 million in February to $1.03 million in June. Sale prices are, however, still 6% higher year over year in the valley.
Average home sale prices have declined 10% in Greater Vancouver since February but are up 1.3% year over year to June. The average Greater Vancouver property is priced at $1.22 million.
Between February and June prices have remained mostly unchanged in Victoria, Vancouver Island and Kamloops. Prices have modestly increased in this time period in the Kootenays and Powell River.
In terms of gross dollar volumes, this June, $6.79 billion changed hands whereas last June saw $10.1 billion in sales — a 23% decline whereas year-to-date sales volume is down 17.3%
"For the second straight month, year-over-year provincial active listings rose, with listing in June 16.4 per cent higher than this time last year. While active listings remain below what is typical for a balanced market, some markets and housing types have tipped into balanced or even buyers’ market territory as sharply higher mortgage rates push potential buyers to the sidelines," added BCREA.
The Bank of Canada’s key interest rate has risen 1.25% since last year and the bank forecasts rates rising from 1.5% today to about 3% by the end of the year in order to suppress demand on goods to tame inflation, which reached 7.7% in May.
This means new five-year fixed mortgages are being set by banks at about 5.5% as opposed to a common rate of 2 to 2.5% last year.