The recent interest rate hikes implemented by the Bank of Canada in June have had a noticeable impact on the real estate market in British Columbia. According to the British Columbia Real Estate Association (BCREA), the average home price in the province increased by 4.9 percent in the last month compared to September 2022. This increase in home prices can be attributed to the rise in mortgage rates caused by the interest rate hikes.
Brendon Ogmundson, the Chief Economist of BCREA, stated that home sales in BC have been adversely affected by these interest rate changes. Sales are trending below-average levels, and high borrowing costs pose challenges and difficulties for potential buyers.
In September, the average selling price for homes in British Columbia was $966,500, representing a 4.8 percent year-over-year increase, similar to prices in August. However, the number of home sales, 5,531, was approximately 20 percent below the normal seasonal levels. It’s worth noting that sales in September 2022 were exceptionally low, so this year’s figures were about 10 percent higher.
The total value of homes sold in September reached approximately $5.3 billion, marking a nearly 16 percent increase compared to the same month the previous year. Nevertheless, year-to-date sales volume decreased by 15 percent, nearly $58 billion. Unit sales also declined by 11.5 percent, with 59,570 units sold, and the year-to-date average home price dropped by 4 percent to $972,049.
In terms of inventory, the province experienced a slight increase in active listings month-over-month and year-over-year, totaling more than 33,000 properties. This is the highest total inventory it has been in three years. British Columbia’s sales-to-activity ratio currently stands at around 17 percent, with Victoria being the only market with a ratio above 20 percent. Ogmundson notes that as sales slow down and listings increase, the market moves towards a balanced state. However, for British Columbia to achieve a sustainably balanced market in the long term, active listings would need to increase by more than half.
