Vancouver's hot real estate market won't be cooling off any time soon, says Canada's national housing agency.
Housing prices in the Vancouver region are headed for a record high this year, and signs point to a continuing upward trend in Canada's most expensive property market, fuelled by steady population growth and economic stability.
The price for detached houses, condos and townhouses sold in Greater Vancouver is on track to average $811,000 this year, up 5.6 per cent from $767,765 in 2013, according to Canada Mortgage and Housing Corp.
CMHC predicts that average prices for resale properties will rise 1.2 per cent to $821,000 in 2015 and climb another 1.7 per cent to $835,000 in 2016.
Sales on the Multiple Listing Service will jump 13.2 per cent to 32,800 this year, before slipping to 32,250 units in 2015 and 31,600 in 2016, the agency said in its market outlook for Greater Vancouver. The forecasts are above the 15-year average of nearly 31,300 sales annually.
"Looking ahead, existing home sales are projected to ride the 2014 momentum into much of 2015 before anticipated higher interest rates take some steam away towards the latter part of 2015," CMHC said, adding that population growth in Greater Vancouver is largely driven by migration from overseas.
Net migration is forecast to grow 11 per cent to 26,500 arrivals in the Vancouver area this year, followed by a 7.5-per-cent gain to another 28,500 people in 2015.
"A strengthening economy should help full-time employment gain more traction for all age groups," CMHC said. "Employment and population changes are two of the key drivers behind housing demand."
The average price for a detached house in the Vancouver region is forecast by CMHC to climb 4.8 per cent to $1.51-million next year. A May story in the New Yorker magazine on Vancouver's pricey houses asserted that the B.C. city has become part of a global market in real estate, even though it "doesn't have the cultural cachet of Paris or Milan."
An October report titled Emerging Trends in Real Estate echoed the magazine's assessment. The study by PricewaterhouseCoopers and the Urban Land Institute noted that while Vancouver has a lower global profile than those two major European cities, real estate on Canada's West Coast is seen as a hedge against political risk during turbulent times in other parts of the world. Vancouver "does offer comfort and stability – and a place for the world's super-rich to park sizable funds in local real estate as a hedge against risk," said the report.
As for new home construction, housing starts in the Vancouver region are on pace to rise 1.1 per cent to 18,900 units this year, slip to 18,700 next year and then increase to 19,250 in 2016, according to the CMHC forecast. The overall trend is stable, said Robyn Adamache, the agency's senior market analyst for Vancouver.
CMHC's outlook covers Vancouver suburbs such as Richmond and Burnaby. The agency's other research includes tracking Fraser Valley communities, from sprawling Surrey to Abbotsford.
Average prices for existing Fraser Valley properties are expected to increase 4 per cent this year to $510,000, then rise 0.5 per cent to $512,500 next year and gain another 2.2 per cent to $524,000 in 2016.
CMHC is calling for 14,500 resale houses changing hands this year in the Fraser Valley, up 12.4 per cent from 2013. That will be followed by 13,500 sales in 2015 and 13,750 in 2016, the agency said.
The forecasts would be thrown off if interest rates were to soar, resulting in a housing slump nationally, but industry experts aren't expecting sharp rate increases.