(Canadian Press photo)

Greater Vancouver house prices expected to rise five per cent in 2018

Strict incoming mortgage rules will slow growth for first half of 2018

Despite tough new mortgage rules being introduced in January, house prices in the Greater Vancouver area are expected to go up by 5.2 per cent in 2018.

According to a Royal Le Page report released Wednesday, the impact of the new mortgage “stress test” is likely to only lead towards price stagnation for the first half of the new year.

The new rules mean that all borrowers must qualify for a mortgage based on either the five-year benchmark rate or their lender’s actual rate plus two per cent, whichever is higher. The change will apply to all mortgages, new or renewed, even if the downpayment exceeds 20 per cent.

“With a large number of existing homeowners potentially failing the test when refinancing next year, a temporary reduction in consumer confidence may further stagnate price growth as potential buyers and sellers take a ‘wait and see’ approach,” the report reads.

The report predicted that growth in the Lower Mainland will be slightly faster than in the rest of Canada; country wide, home prices are expected to rise by 4.9 per cent to $661,919, versus this region’s 5.2 per cent jump to $1,353,924.

READ: Strong economy fuels housing sales in B.C.: report

The report notes that Greater Vancouver’s slightly faster growth and higher house prices could be attributed to B.C.’s economy, which is expected to be a top performer in 2018.

The new mortgage rules are expected to further strain the region’s housing market. Not only will it be harder for buyers to qualify but the report finds that potential sellers may hesitate to list their homes at all, in fear that they won’t be able to qualify to buy a property of their own.

“We are watching how the new ‘stress test’ will impact the Greater Vancouver market,” said Randy Ryalls, Royal LePage Sterling Realty general manager.

“Low inventory will continue to put upward pressure on prices. However, with the introduction of the stress test, as well as other factors such as potential interest rate hikes, price growth will likely be limited to mid-single digits.”

Additional housing market pressure is expected to come from both a surge in those moving from other provinces to B.C. and peak millennials still looking to buy property despite increasingly unaffordable prices. Almost nine-in-10 millennials see real estate as a good financial investment.”

“[Our] research into peak millennials shows that younger Canadians desire to own their own homes with the same conviction as their parents before them,” said Royal LePage CEO Phil Soper.

“The tight rental market is reflective of their dreams sitting on hold while they save for a down payment. Of course there will be those who are priced out of a market altogether. They will continue renting and this will drive demand for investor properties.”


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Just Posted

How much does your city spend per person on snow removal?

Black Press Media compares 2018 ice and snow removal budgets of various Lower Mainland communities

B.C. BUDGET: Surplus $374 million after bailouts of BC Hydro, ICBC

Growth projected stronger in 2020, Finance Minister Carole James says

Preliminary inquiry starts for Chilliwack woman charged in 2016 fatal hit-and-run

Linnea Labbee, 70, accused in Dec. 1, 2016 incident that killed 78-year-old Fourghozaman Firoozian

Short closures on Agassiz-Rosedale Bridge during pier upgrades

The project comes before the major retrofit of the bridge, which has been in the works since 2017

Snowfall warning: 5-10 cm expected in Lower Mainland

The snowfall will start Tuesday and carry on into the evening, before tapering off Wednesday

VIDEO: 8 things you need to know about the 2019 B.C. budget

Surplus of $247 million with spending on children, affordability and infrastructure

‘Bullet missed me by an inch’: Man recounts friend’s killing at Kamloops hotel

Penticton man witnessed Summerland resident Rex Gill’s murder in Kamloops

B.C. BUDGET: Income assistance raise still leaves many below poverty line

$50 per month increase included in funding for poverty and homelessness reduction

B.C. BUDGET: Indigenous communities promised billions from gambling

Extended family caregiver pay up 75 per cent to keep kids with relatives

B.C. BUDGET: New benefit increases family tax credits up to 96 per cent

BC Child Opportunity Benefit part of province’s efforts to reduce child poverty

B.C. BUDGET: Carbon tax boosts low-income credits, electric vehicle subsidies

Homeowners can get up to $14,000 for heating, insulation upgrades

B.C. man survives heart attack thanks to Facebook

A Princeton man suffered a heart attack while at an isolated property with no cell service

Abbotsford man sues Maxime Bernier’s People’s Party over trademark

Satinder Dhillon filed application for trademark same day Maxime Bernier announced the new party

New trial ordered over banning whales, dolphins at Vancouver aquarium

Park board’s appeal reverses previous decision that found it had no right to implement a ban

Most Read