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New housing price index steepens its growth rate in city and across BC, leading the country’s monthly increase, says statistics agency

Joannah Connolly
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New home prices in the Vancouver Census Metropolitan Area (CMA) increased again in September, picking up the pace of annual growth compared with last month, according to Statistics Canada data published November 12.

The new housing price index in the CMA increased 1.8 per cent year over year in September –  the third highest annual rate of growth in the country, after Hamilton and Toronto–Oshawa CMAs.

Across the whole of BC, new home prices rose 1.5 per cent compared with September 2014 – another increase in the pace of annual price growth.

Year over year, new housing across the country increased its price index in September by 1.3 per cent.

Month over month, new home prices in both Vancouver rose 0.4 per cent in September compared with August’s figures – the steepest monthly rise in the country. Statistics Canada also reported that Vancouver CMA was the top contributor to the modest national monthly increase of 0.1 per cent. BC’s new home prices, largely influenced by Vancouver, rose 0.3 per cent month over month.

Increases in new home prices often do not reflect those seen in the resale market, as the price paid for a new home is only measured when the transaction is completed and registered with the Land Registry, rather than when the home is originally purchased off-plan. Because of long lead times on home construction, the new home prices registered today are those homes sold many months or even years ago – whereas MLS® resale home prices are much more up to date.

Victoria CMA’s new home prices continued their slide in September, although at a slower pace, down 0.8 per cent compared with the same month last year and flat compared with the previous month. Victoria was one of seven CMAs to record an annual decrease in September, out of a total of 21 CMAs surveyed.

To see Statistics Canada’s full report and interactive tables, click here.

© 2015 Real Estate Weekly

Peter Mitham
Van. Courier

Vancouver house prices are on track to post a 10.4 per cent increase this year over last, but the Canada Mortgage and Housing Corp. (CMHC) attributes the gain to the kinds of homes changing hands, not the participants in the market.

“One of the key things that’s been going on in Vancouver is there’s been compositional effects driving house prices higher,” remarked CMHC chief economist Bob Dugan during a media call at the end of October.

But so far as drivers of those sales, and the higher prices, the CMHC maintained ignorance last week.

“I don’t have data … that tells me what share of those single homes being sold are being purchased by foreign investors, and so that’s sort of a data gap that has to be solved,” Dugan told media. “CMHC is trying, in partnership with other people, to see if there are other things we can do to get more information, but for now that is a data gap that we just have to acknowledge exists.”

CMHC senior market analyst Robyn Adamache was even more consoling to the market.

“It doesn’t have a huge impact on the market,” she told attendees at the CMHC’s annual housing outlook conference last week in Vancouver. “It’s safe to assume at this point that the foreign investor presence is relatively limited, particularly when you look at a big-picture aggregate level. There are neighbourhoods that are probably more affected, there are certain condo buildings that are more affected by foreign ownership, but overall — [they’re] not a huge impact on the housing market.”

Price check

What is driving prices higher, according to the CMHC, is a mix of low interest rates, steady job growth and household formation through in-migration.

The CMHC isn’t expecting interest rates to rise before late 2016, and possibly even early 2017. A solid foundation for the market has helped push inventories of unsold condos down to just an eight-month supply, less than half what it was a year ago and a fifth of what it was in the dark days of 2009.

Prices have increased in turn, fuelling affordability concerns.

“Price is more the story,” said Dugan. “The various fundamental factors are supporting house prices, but not fully because house price growth has been so strong it’s run a little bit ahead of what fundamentals can support.”

However, the CMHC isn’t overly concerned; as Adamache said in her review of the Vancouver market at last week’s housing outlook conference: “High prices do not mean overvaluation.”

But, as in the past, strong market activity in Vancouver (and Toronto) is skewing local and national house price averages — something CMHC regional analyst Carol Frketich acknowledged in qualifying her forecast of a significant cooling trend in price growth over the next two years.

The CMHC expects a B.C. residence to cost an average of $636,300 in 2016, while in Vancouver the price will average $914,100.

© 2015 Vancouver Courier

Steady incline of provincial sales figures masks significant differences between thriving southern and resource-driven northern board stats

Joannah Connolly
Other

Home sales across BC maintained their steady annual incline, although these figures obscure significant variations between southern and northern markets, according to a BC Real Estate Association report issued November 12.

There were 8,725 residential sales on the Mulitple Listing Serive® (MLS®) in October 2015 – a 14.1 per cent rise over October 2014.

The total sales dollar volume across BC in October was $5.8 billion, an impressive 32.3 per cent increase over the same month last year. This jump is due to combination of the rising transaction volumes and the average MLS® residential price in BC rising to $667,480, up 16 per cent from October 2014.

Year-to-date, BC residential sales dollar volume increased 33.6 per cent to $55.3 billion, when compared with January-October 2014.

“Consumer demand continued at a heightened pace in October,” said BCREA economist Brendon Ogmundson.

However, an examination of individual real estate board reports shows that the steady rise of activity in BC as a whole masks wild variations between individual markets across the province.

Ogmundson added, “Market conditions have diverged significantly in the province, as very low supply and a near-record pace of home sales in the Metro Vancouver area is offsetting resource sector-driven weakness in northern markets.”

Powell River and South Okanagan were two boards in the province to see the highest sales growth, up 95.7 and 30.5 per cent compared with last October, although both markets are so small as to be significantly affected by relatively few sales.

The larger markets to see strong unit sales growth in October were Chilliwack, the Fraser Valley and Greater Vancouver, rising 24.1, 21 and 19.3 per cent respectively year over year.

The Northern Lights and BC Northern regions recorded the biggest annual decline in unit sales, down 58.5 and 8.9 per cent year over year – although, again, the Northern Lights region is small enough to be affected greatly by small changes, so the figure could be anomalous.

The Northern Lights board again registered the province’s largest annual price drop, with the average price of a home in that region falling 15.3 per cent in October compared with the same month in 2015.

Greater Vancouver and the Fraser Valley’s reported annual average price rise of 15.6 per cent were the largest in BC. Greater Vancouver’s sales-to-active-listings ratio was again the province’s highest, meaning that is still deepest into sellers’ market territory.

© 2015 Real Estate Weekly

Repeat sales prices up 10%

Emma Crawford Hampel
Van. Courier

Vancouver home prices continued to grow in October, with the average sale price increasing 15.6 per cent over the past year and the repeat sale prices increasing 9.83 per cent.

The average sale price for all home types in Greater Vancouver was $947,334 in October, up 15.6 per cent compared with $819,336 last year, according to data released by the British Columbia Real Estate Association. Across British Columbia, the average sale price was $667,480, up 16 per cent from $575,504 last year.

In total, over $5.8 billion in residential sales took place in the month across the province, with more than $3.5 billion attributable to Greater Vancouver. These totals represent year-over-year increases of 32 per cent and 38 per cent, respectively.

“Consumer demand continued at a heightened pace in October,” said BCREA economist Brendon Ogmundson.

“Market conditions have diverged significantly in the province as very low supply and a near record pace of home sales in the Metro Vancouver area is offsetting resource sector-driven weakness in northern markets.”

The BCREA said the Lower Mainland market had a three-month supply of residential inventory. Across the province as a whole, the supply was about four months.

“A balanced market typically exhibits a five-to-eight month supply of homes for sale,” the BCREA said.

In terms of repeat sales, the city once again saw the biggest year-over-year increases across the country, according to Teranet’s home price index.

Teranet uses statistics compiled from public land registries using a repeat-sales methodology, which means it looks at sales of homes that have been sold at least twice since 1990.

Repeat sale home prices increased 9.83 per cent in October compared with a year earlier, according to the data released November 12.

Price increases in Toronto and Hamilton, both up 9.3 per cent, in Victoria, up 6.4 per cent and in Edmonton, 1.4 per cent, helped prices grow 5.6 per cent overall nationwide. Prices either fell or stayed the same in all other major centres. The biggest decreases were in Quebec City (down 3.2 per cent), Calgary (down 1 per cent) and Montreal (down 0.6 per cent).

“[October] was the first month since October 2009 that prices were up from a year earlier in only five of the 11 metropolitan markets surveyed,” said Marc Pinsonneault, senior economist, National Bank of Canada’s economics and strategy group.

Compared with one month prior, home prices were up 0.6 per cent in Vancouver, which was well above the national average of 0.1 per cent. Winnipeg led the country in gains in October, with prices increasing 1.9 per cent. Prices were up in Toronto and Victoria (both 0.3 per cent) and Edmonton (0.2 per cent), but fell in all other major centres including Halifax (down 1.7 per cent) and Calgary (down 0.8 per cent).

“For Vancouver it was the 10th consecutive month in which prices did not fall, for Toronto the eighth — a trend consistent with the sellers’-market conditions prevailing in those two markets,” said Pinsonneault.

© 2015 Vancouver Courier

Steve Randall
Other

There will be an easing of the growth in home sales in British Columbia in 2016 but the market will continue to be stronger than average. This year has been booming with the BC Real Estate Association expecting full-year sales of above 100,000 units to hit the third highest on record. It will also be the first year since 2007 that sales have been above the ten-year average.

BCREA figures show a 15 per cent rise in sales in 2014 and almost 20 per cent for 2015 but there will be a 7 per cent decline in 2016. That still leaves a lot of sales over the next 12 months with almost 94,000 expected. “Less latent pent-up demand and gradual upward momentum of mortgage interest rates is expected to ease housing demand next year,” said Cameron Muir, BCREA Chief Economist.

Prices will continue to be impacted by low inventory and this year’s average MLS price is expected to have increased by 10.2 per cent before easing to 2.2 per cent in 2016. That would mean an average price of $639,700 for 2016. Starts will hit 30,000 for this year and be around 28,800 next year.

Copyright © 2015 Key Media Pty Ltd

BCREA 2015 fourth quarter housing forecast

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