B.C. housing market makes big recovery from 2012 slump

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British Columbia's real estate market is enjoying a jump in sales after last year's slump, with average prices getting a lift from the increased housing demand.

There were 6,498 sales on the Multiple Listing Service (MLS) last month across the province, up 43.2 per cent from September of 2012, the B.C. Real Estate Association said Tuesday. The average price in September for B.C. resale properties reached $537,458, or an 8.8-per-cent gain from the same month last year.

Sales activity across Canada sagged after Ottawa tightened mortgage borrowing rules in July, 2012. "We're seeing the B.C. housing market recover after consumer demand declined for most of 2012," association chief economist Cameron Muir said in an interview. "Demand has recovered, but sales are up from a relatively low place. We're now back up to the 10-year average level for sales."

B.C. home sales posted their strongest showing for September in four years. Sales volume last month surged 64.3 per cent in Greater Vancouver, 53.5 per cent in the Kootenay area and 46.7 per cent in the Okanagan Mainline region.

MLS prices for single-family detached homes, condos and townhouses in Greater Vancouver averaged $786,522 last month, up 8.8 per cent from a year earlier – matching the percentage climb in the provincial average price.

In the Victoria area, average prices increased 3.1 per cent to $486,744, while prices rose 2.9 per cent to $240,198 in the B.C. Northern district, which includes Prince George.

There were 56,347 property sales in British Columbia in the first nine months of this year, a 3.1-per-cent improvement over the same period in 2012.

But Mr. Muir cautioned that housing sales growth is expected to slow in the months ahead as interest rates edge upward. "Continued acceleration in consumer demand is not likely at the same pace," he said. "Unit sales aren't going to climb as fast in the next six months as they have in the last six months."

Bryan Yu, the Vancouver-based economist at Central 1 Credit Union, said a sluggish economy, low employment growth and higher interest rates are expected to weigh on the housing market at the end of this year. "The endurance and strength of the Lower Mainland rebound is surprising and has provided a lift to economic activity in the region, but we expect the momentum to dissipate in short order," Mr. Yu said in a briefing note.

Average prices have improved provincially. But the benchmark MLS index price, which strips out the most expensive properties as part of a formula to give a better barometer of the housing market, has been flat so far this year in the province's two largest real estate regions – Greater Vancouver and the Fraser Valley.

As the number of consumers who have preapproved mortgages at lower rates dwindles, that will dampen demand and likely lead to little change in the home index price next year, Mr. Yu said.

Mr. Muir added that it will be a mixed bag for the housing market provincially and nationally in 2014. "We're going to see stronger economic growth next year, but also higher interest-carrying costs. It will be a bit of a saw off between those two factors," he said.