From CMHC. The British Columbia economy is forecast to expand 2.8 per cent in 2015 and 2.9 per cent in 2016, compared to projected growth of 2.3 per cent in 2014. An increase in wages and salaries in 2014 will support growth in consumer spending on goods and services in the year ahead.
An expected pick up in the pace of U.S. economic growth, coupled with a lower-valued Canadian dollar, will support British Columbia exports. As well, the province is well-positioned geographically to benefit from increased Canada-Asia Pacific trade. The province’s modern port facilities, international airports and proximity to China are expected to result in increased movement of goods and international travelers.
Employment growth is forecast to pick up during 2015 and 2016, compared to 2014. While employment growth has been modest in 2014 at a projected 0.7 per cent annual increase, underlying trends point to ongoing support for housing demand.
A shift to private paid employment and a reduction in self-employment is contributing to growth in aggregate wages and salaries at twice the current rate of inflation.
Projected population growth of just over one per cent per year, is expected to add approximately 30,000 households annually. Net interprovincial migration turned positive in the first half of 2014 supporting a higher level of household formation than recorded in 2013. This trend is expected to continue during the 2014-2016 forecast period.
In Detail
Single Starts: Single-detached home starts are expected to total 9,500 units in 2015 and 9,600 units in 2016, compared to an estimated 9,200 in 2014. Demand for single detached homes in the province’s urban centers outside of the Lower Mainland is expected to be the driving force behind this rising trend. Resale market conditions in Victoria, Kelowna and Vancouver have shifted with sales growth outpacing listings growth, resulting in rising resale prices. Some of this housing demand is expected to spill over into the new home market as the gap between new and existing home prices narrows due to the popularity of existing units.
Multiple Starts: Multi- unit starts are forecast to maintain a relatively stable level compared to the past decade, although some increase is expected in 2016 as homebuyers shift to less- expensive housing types as mortgage interest rates rise. Resales: MLS® sales are forecast to moderate in 2015 following a projected 11.6 per cent increase in 2014. In 2016, the level of resales is expected to remain relatively unchanged as rising mortgage interest rates dampen homeownership demand and offset some of the positive impacts of stronger employment growth.
Prices: Balanced resale market conditions are expected to prevail in most housing markets within British Columbia. In 2015 and 2016, MLS® home prices are forecast to average $566,300 and $573,000, respectively, compared to $564,200 in 2014.
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