B.C.’s hyperactive housing market will start to chill out next year but it will only be temporary, Credit Union Central of B.C. says in its latest housing survey being released today.

Helmut Pastrick, Central’s chief economist, says market activity in B.C. will stay robust but at a slightly lower level and under weaker market conditions than this year.

However, Pastrick stops short of saying the current market cycle has peaked.

“Based on the available evidence, and more importantly on the expected performance of key sales drivers, this is likely not the long-awaited market-cycle peak.”

But he does say the “shift during the past few months from a seller’s market to a balanced market is substantial.”

“Prices have slowed considerably and have declined in some instances as a result of recent weaker sales. In 2005, average sales prices will post only a small gain,” said Pastrick.

After the large price increases that have been going on since 2000, more potential purchasers are holding off with the deterioration in affordability, he says.

“Housing sales are predicted to firm during the course of 2005. However, it is unlikely the market will see a return to the tight conditions that existed in the early-2003 to early-2004 period,” he added.

Sales next year are expected to fall slowly to 94,800 from this year’s 98,000 but prices will still edge up to an average provincial price of $289,700 compared with $286,200 this year.

Slightly lower housing starts next year are forecast as multiple-unit housing starts decline after a strong run-up in 2004. Total starts are projected to reach 31,600 compared with this year’s 32,400.

Single-family starts will rise to 15,500 compared with this year’s 14,300 with multiple-starts declining to 16,100 from 18,100.

The renovation sector, however, is expected to stay extremely strong with spending rising to $4.1 billion next year from this year’s $3.8 billion.

There is good news for renters.

Soft rental-markets conditions are expected to prevail next year with rental increases staying below the level of inflation.

Regional housing-market conditions vary with most of the expected sales, price and starts adjustments occurring in the Lower Mainland area.

Interior housing markets have shown more strength in 2004 and that is projected to extend into 2005.

© The Vancouver Province 2004