House prices in BC expected to rise – RBC Forecast
Home prices in British Columbia are estimated to keep rising this year and next, but the rate at which prices are increasing will start to slow down in 2016, according to a forecast released by RBC on August 19.
The report stated that average resale prices for homes in BC in 2015 would be 7.8 per cent higher than 2014’s average, and in 2016 they would increase an additional 4.9 per cent. This prediction is in-sync with a recent forecast made by TD Bank July 30.
The report also predicted that sales of homes on the MLS across BC will increase by 20 per cent by end of 2015, owing to lower interest rates and an improved labour market. However, the sales will fall 4.8 per cent in 2016, contributing to the slower price growth rate.
Housing starts in BC are expected to follow a similar pattern, rising 16.7 per cent in 2015 but dropping 6.3 per cent year over year in 2016 as demand decreases. RBC said the slowing in price growth could be driven by an increase in interest rates in that time.
The report said, “Our base case scenario is that the Bank of Canada will begin to remove monetary stimulus by the middle of 2016 and raise the overnight rate by 75 basis points to 1.25% during the second half of next year.”