B.C. home prices are headed south this year before rising slightly in 2013, according to a quarterly forecast by the Canadian Real Estate Association.
The forecast average drop of four per cent the biggest decline in the country and far steeper than the 1.1-per-cent forecast drop nationally will bring the average price of a residential B.C. property down to $539,100 from $561,300 in 2011.
However, the average price is expected to rise 0.5 per cent to $541,800 in 2013.
Gregory Klump, CREAs chief economist, said the main reason for B.C.s forecast price decline is because multi-million-dollar sales activity in Richmond, West Vancouver and Vancouvers westside in early 2011 caused both the provincial and national average prices to temporarily spike, a phenomenon thats not expected to repeat itself this year.
It reflects what happened by way of the average price increase in Vancouver, he said. There was a spike in high-end activity (and) it skewed the average price higher temporarily.
We dont expect it to happen this year.
As a result, the report said, while prices will likely hold steady near current levels, the national average price is forecast to dip by 1.1 per cent in 2012 to $359,100. Prices are expected to rise modestly in 2013, with the national average inching upward 0.9 per cent to $362,300 at the national level.
According to the report, home resales are expected to rise by 0.3 per cent this year in Canada, with low interest rates continuing to support the market.
For B.C., home resales are expected to drop by 1.9 per cent, before rising slightly in 2013.
National sales are forecast to reach 458,800 units in 2012, while in B.C. sales are expected to total 75,300.
Rising demand in Alberta, Saskatchewan and Nova Scotia is expected to offset softer activity in British Columbia, Ontario, and New Brunswick, CREA said.
Risks to the Canadian economic outlook remain elevated owing to the European sovereign debt quagmire, but the continuation of low interest rates is the silver lining, added Klump.
