A gloomy new real estate forecast predicts an 8.5 per cent drop in home prices in 2017 across Metro Vancouver.
The report released by Royal LePage indicates the market decline would likely be worse if not for the “remarkably resilient” condo sector, which offers more affordable prices, and the region’s nation-leading economy.
“It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016,” said Randy Ryalls, general manager of Royal LePage Sterling Realty.
“However inventory will continue to be the story in the new year, as any movement within the market will be exaggerated at their current, extremely low levels, meaning that if sentiment remains unchanged, conditions could worsen and prices may fall even further.”
The report also predicts foreign investment in Metro Vancouver will wane further due to the foreign buyers’ tax and China’s imposition of new, stricter requirements on currency conversions.
It says the region’s biggest price gains of 2016 came in West Vancouver, where aggregate home prices soared 32.8 per cent during the year to $3.57 million.
“Severe affordability issues, brought on by rapid appreciation through the year has caused sales activity to slow, particularly in the region’s near million-dollar condominium market, where prices depreciated by 7.6 per cent on a quarter-over-quarter basis.”
In Surrey, aggregate home prices (blending different home types) climbed 22 per cent year-over-year to $765,000.
“Extremely low inventory levels, new mortgage stress tests and the threat of lenders hiking interest rates have all given pause to many attempting to enter the market, particularly in the detached segment where affordability has made prospective purchasers question their buying power,” the report observed.
Langley saw aggregate home prices rise 25.7 per cent to end the year at $786,720.
While markets in pricier parts of Metro began to struggle in the latest quarter, the report says many buyers were drawn east to areas like Langley in search of affordability, resulting in more sales and competition over listings.