CMHC predicts price growth in Vancouver housing market
October 28, 2019 | Posted by: Patrick Mulhern
Metro Vancouver housing market to see modest price growth in 2020 and 2021, predicts CMHC
Buyers and renters can expect price increases due in part to continuing population growth across the region
CBC News · Posted: Oct 24, 2019 1:18 PM PT | Last Updated: October 24
The Canada Mortgage and Housing Corporation says the pace of construction on new homes will continue above the 10-year average as the Metro Vancouver population grows. (Jonathan Hayward/The Canadian Press)
The Metro Vancouver housing market will remain 'balanced' over the next two years with home prices expected to increase in line with population growth, according to the latest housing market outlook report from the Canada Mortgage and Housing Corporation.
Housing sales and prices have dipped recently as a result of multiple factors — including rising mortgage rates and new taxes — but the CMHC predicts that starting in 2020 and through 2021, there will be a modest increase both in prices and sales volume.
Attached homes, condos and apartments priced under $700,000 are expected to generate the strongest demand because 'homes in this price range can be accessible to buyers making a purchase based on their income compared with properties requiring substantial equity for a down payment,' says the report.
The report says housing starts are expected to remain high, especially multi-family homes, which currently account for 88 per cent of unit starts.
'As densification continues and affordability challenges remain, multi-family units will account for the vast majority of new home construction,' said Eric Bond, CMHC's Vancouver senior specialist.
Employment in the region is expected to help drive the new home market as unemployment rates remain low and job vacancy rates high. The report suggests employers in the region may need to increase wages in order to attract and retain employees.
'Full employment and rising wages will both contribute to household finances and consumer confidence, which in turn support major purchases such as housing,' said the report.
Renters are unlikely to see much relief. The report says the tight rental market will continue, driven by the net gain of population into the region, which will push up demand and rents.
The CMHC's chief economist said international trade tensions are considered a downward risk to the Canadian housing market.
'Arrears rates are very low on mortgages and that's a very positive thing,' said Bob Dugan. 'But the level of debt in Canada is high and should there be some sort of a shock that causes unemployment to rise or the level of employment to drop, that can really have an impact on the performance of loans.'