The British Columbia Real Estate Association predicts continued cooling of the provincial housing market in 2018, but it cautions would-be home buyers that prices likely won't soften.
The association has released its 2017 Fourth Quarter Housing Forecast showing an expected 8.8 per cent decrease in residential sales across the province this year and a further 10.4 per cent decline next year.
Data shows estimated home sales in 2018 are expected to dip to 91,700 units, down more than 10,000 from the record set in 2016, but still well ahead of B.C.'s ten-year sales average.
Association chief economist Cameron Muir says the supply of homes for sale is at or near its lowest point in decades and the imbalance between supply and demand has been largely responsible for rapidly rising house prices.
The average price of a home in B.C. is forecast to increase 3.1 per cent to $712,300 this year, and a further 4.6 per cent to $745,300 in 2018.
Muir doesn't see much relief, saying in a news release that higher interest rates and more stringent mortgage qualification rules "will reduce household purchasing power and erode housing affordability."
The association says interest rates are expected to rise in the next year and new mortgage qualification rules will carve into purchasing power.
"Given the rapid rise in home prices over the past few years, the effect of these factors will likely be magnified," Muir says.
But he also points to a potential for more balanced market conditions, as weakened consumer demand and a surge in new home completions next year is expected to curb upward pressure on home prices.
