The BC economy has struggled to grow in the past two years, facing headwinds from high interest rates, falling commodity prices, and slowing household spending. However, the Bank of Canada’s aggressive tightening has helped to cool inflation significantly, and the Bank has begun easing by lowering its policy rate in both June and July earlier this year with further rate cuts expected.

This policy shift has positive implications for the BC housing market, which has been sluggish since 2022 as high borrowing costs and robust home prices have stretched affordability. BC home sales have trended well below their ten-year average since the summer of 2023, but with fixed mortgage rates falling significantly from their 2023 levels and the Bank of Canada lowering rates, we expect home sales to rebound in the second half of the year and carry over into 2025.

After a weaker-than-anticipated start to the year, especially in the Lower Mainland, our forecast calls for MLS® unit sales to be only slightly higher in 2024, followed by a 10.7 per cent rise in 2025. This would bring home sales back to their ten-year average level by the end of the forecast horizon.

The supply side of the market has also been adjusting to the changing demand conditions. After posting a near 20-year low in 2023, new listings have trended near historical averages in most markets this year, though notably higher in areas more impacted by restrictions on short-term rentals.

A steady supply of new listings and sluggish sales over the first half of the year has resulted in the total inventory of homes for sale rising to its highest level since 2019. Market conditions have been trending near the lower end of what is traditionally defined as a balanced market. As such, average home prices have mostly trended sideways over the past year, with the notable exception of Greater Vancouver where the average price has returned to its 2022 peak.

We anticipate that the average home price in BC will edge up slightly this year, rising 2 per cent to an annual average of $990,500. As home sales pick up over the next year, we expect the market to tighten and for the average price in BC to rise 2.9 per cent to an average of $1.02 million.

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Provided by: BCREA