Housing prices in B.C. should rise modestly this year after stronger gains in 2014, according to a new forecast by Central 1 Credit Union.
The association of B.C. credit unions predicts a 2.5 per cent increase in resale home prices in 2015 and similar increases of between two and three per cent out as far as 2018.
Bryan Yu, senior economist with Central 1, sees continued strength in urban real estate markets.
“I think sky-high prices in Greater Vancouver have more room to grow with little risk of a significant downturn,” Yu said.
One trend he expects to continue is the divergence in price growth between detached houses and multi-family units.
“While condo markets have been soft, with median home values flat since 2010, detached values have surged,” Yu said. “Single-family housing is increasingly a luxury good detached from income drivers.”
His report predicts home prices in Metro Vancouver will continue to be underpinned by the scarcity of developable land, the growing population and international demand.
It says the collapse in the price of oil will be generally positive for real estate markets, because it leaves more discretionary money in consumers’ pockets.
But crude’s plunge is painful for Albertans and will restrain their demand for B.C. recreational property in the Interior and Vancouver Island.
The lower Canadian dollar, however, has made real estate here more affordable relative to the rising prices of U.S. homes, the report notes.
Central 1 expects no increase in interest rates until early 2016 but expects five-year rates will average 6.5 per cent in 2018.
“Record-low mortgage rates will not last indefinitely, but will remain low enough to underpin housing market demand this year and next.”