Today brought evidence that the provincial government and the real estate industry may not be seeing eye to eye on Vancouver’s affordability situation.
The British Columbia Real Estate Association spent the day discussing a Market Intelligence Report they published, which argues that “using history as a guide to what comes next for the Vancouver housing market, one would expect that without a major economic shock or significant change in housing policy, that…growth in home prices will likely trend lower over the next 12 months.”
“Past performance has no indication on what will happen in the future, but it’s hard to argue with a trend that keeps happening,” said Cameron Muir, Chief Economist for the BCREA, who emphasized the paper was not a forecast.
In their analysis, the BCREA looked at every time average home prices had posted monthly year-over-year increases of 20 per cent or more.
This has happened 46 times between 1981 and the present day, says the BCREA, and in virtually every case, that acceleration in prices has been “followed by a reversion of growth back to its long-run average”, and occasionally a short decrease in average prices.
(You can read the full report here)
“Typically, we see short periods of a ramp-up of prices, and then kind of a plateau, in which prices go up maybe marginally, or even go down a bit for a few years before another cycle begins,” says Muir.
The month-over-month increases in Vancouver home prices were dramatic in 2015, with the average price of a single-family detached home in the Greater Vancouver area growing as much in a five-month period as it did from 1981 to 2005.
However, when looked at through the lens of percentage increases, Metro Vancouver’s current housing boom does have precedents – most notably in the late 1980s.
But it appears that a significant change in policy is coming, as British Columbia Premier Christy Clark published a video this afternoon promising “bold action” on the file.
“We’ve been working on solutions for the last several months. In the coming days and weeks, we are going to lay out a plan that helps address housing affordability,” she said.
“It’s all about making sure that the dream of home ownership, the dream of living in a world class city like Vancouver…that that dream remains in the reach of the middle class.”
In the video, Clark mentions five priorities: Increased housing supply, smart transit expansion, support for first-time homebuyers, consumer protection, and increased rental supply.
Comments