Ashley Ford
Province
There will simply be no stopping B.C.’s vibrant residential real-estate market in the foreseeable future, Credit Union Central BC said yesterday in its latest provincial housing forecast.
The institution’s housing reports are closely watched by all sectors of the industry and its bullish outlook may surprise some.
Central’s head economist Helmut Pastrick says the market will reach new highs over the next two years.
“Economic conditions remain positive for a further expansion in housing activity,” he said. “The main constraint on demand is higher prices, which will reduce affordability for first-time buyers.”
Despite this, Pastrick forecasts that average home prices throughout the province will rise nine per cent next year and another seven in 2007.
He sees sales rising three per cent to 109,300 units next year and another seven per cent to 117,200 in 2007. Sales are expected to be come in around 106,500 this year.
The growth will be widespread across the province, especially in resource-based towns.
And in-migration numbers will grow as well with net migration climbing 50,000 this year and increasing to 65,000 in 2007.
Patrick says there is little chance of a “bubble” market developing.
Despite rising prices, he says, homes are remain generally affordable with low interest rates. “Another consideration is that speculation is not rampant, which would result in even higher prices if it were.
“The speculation indicator is well-behaved at this time,” he adds.
Peter Simpson, chief executive officer of the Greater Vancouver Home Builders’ Association, backs the forecast. “He [Pastrick] is very seldom wrong and is highly respected,” he said yesterday.
Just back from meeting with economists in Ottawa, Simpson says there is general agreement that western Canada, and B.C. in particular, will have strong housing sectors over the next two years.
The two areas of concern relate to getting enough skilled labour and the impact future interest-rate increases might have, he says.
While there is no doubt interest rates are heading up, the increases will be gradual and are not expected to have any major impact on the Lower Mainland housing market, he added.
Of course, he said, there is always some dampening effect from higher rates but “we don’t see it as being widespread.”
Simpson says the booming renovation business is putting further pressure on labour availability forcing contractors to be very careful in planning and scheduling projects.
Both Pastrick and Simpson say the renovation sector will quicken its pace again next year. Simpson estimates renovation spending will surpass $6 billion while Pastrick is more conservative, saying it will reach $4.6 billion.
