Economic fundamentals are forecast to improve, with job growth concentrated in full-time employment and the provincial population continuing to expand. Increased non-residential investment and consumer spending are expected to be accompanied by a slightly stronger global outlook in 2013, resulting in a modest pick-up in economic growth this year and next. Through the third quarter of 2012, net international migration has been higher than year-earlier levels and this is forecast to continue adding to the province’s population, particularly in the larger urban centres. The interprovincial outflow recorded in 2012 is forecast to turn around in 2013 as job opportunities draw more people to the west, which is also expected to continue over the forecast horizon, further supporting the housing market in 2014.
Reflecting better economic prospects in British Columbia going forward, the outlook for the province’s housing market in 2013 is for an increase in existing home sales and new home construction when compared to last year. However, both sales and new construction are forecast to remain below their ten-year averages. Home prices are expected to remain essentially stable in 2013. Expected stronger economic and employment growth in 2014 will lead to higher levels of resale activity and new home construction, as well as modest home price growth next year in British Columbia. Both single-detached as well as multi-family construction levels are expected to increase in 2013 and 2014.
While the housing market in British Columbia is forecast to benefit from an improving economic outlook over the forecast horizon, risks to the outlook are reflected in a range of forecasts. Following a level of 27,465 total housing starts in 2012, the forecast for total housing starts in 2013 ranges from 27,200 units to 30,400 units. In 2014, the forecast ranges from 27,200 to 33,800 units.
Housing starts are forecast to rise to 9,100 units in 2013 and to 9,500 in 2014, compared to 8,333 units in 20129. However, housing starts in British Columbia will remain below the tenyear average of roughly 11,700 units. In the province’s larger housing markets of Vancouver and Victoria, densification, the high cost of land, and mobility are some of the factors contributing to the shift away from single-detached construction toward more multi-family construction. Together, these two markets accounted for threequarters of the province’s total housing starts in 2012, and 88 per cent of multifamily housing starts.
Multi-family housing starts are forecast to reach 19,700 units in 2013 and increase further to 21,000 units in 2014, compared to 19,132 units in 2012. Housing starts of apartment condominiums, row and semi-detached homes are forecast to rebound in early 2013, following a slowdown in the fourth quarter of 2012. This upward trend is expected to continue into 2014. Building permits have been issued for several largescale projects in the Vancouver CMA and, with site preparations currently underway, these projects are expected to start in early 2013.
Resale transactions in 2013 are expected to reach 73,000 units, up from 67,637 sales in 2012. In 2014, resale transactions will increase further to 79,500 sales. Despite these gains, the level of sales over the forecast horizon will remain below the ten-year average of roughly 86,500 units. While employment and population growth would suggest a higher level of resale activity than projected, a number of factors are dampening sales. These factors include a reduced inventory of homes for sale as some sellers choose to let their listings expire rather than accept lower prices, and buyers take a wait-and-see attitude as existing home prices moderate in the Vancouver and Victoria housing markets.
Compared to an average MLS®price of $514,836 in 2012, existing home prices are forecast to essentially hold steady in 2013 at $511,200, before rising to $524,000 in 2014. On a quarterly basis, resale home prices are forecast to grow at a rate consistent with overall consumer price inflation.