The association has released its 2017 Fourth Quarter Housing Forecast showing an expected 8.8% decrease in residential sales across the province this year and a further 10.4% decline next year.
BCREA estimated home sales in 2018 to dip to 91,700 units, down more than 10,000 from the record set in 2016, but still well ahead of B.C.’s ten-year sales average.
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BCREA chief economist Cameron Muir said that the supply of homes for sale is at or near its lowest point in decades, and the imbalance between supply and demand has been largely responsible for rapidly rising house prices.
The average price of a home in B.C. is forecast to increase 3.1% to $712,300 this year, and a further 4.6% to $745,300 in 2018.
Muir noted that higher interest rates and more stringent mortgage qualification rules “will reduce household purchasing power and erode housing affordability.”
The association further warned that interest rates are expected to rise in the next year and new mortgage qualification rules will carve into purchasing power.
“Given the rapid rise in home prices over the past few years, the effect of these factors will likely be magnified,” Muir said, as quoted by The Canadian Press.
But he also pointed to a potential for more balanced market conditions, as weakened consumer demand and a surge in new home completions next year is expected to curb upward pressure on home prices.
The British Columbia Real Estate Association predicted continued cooling of the provincial housing market in 2018, but it cautioned would-be home buyers that prices likely won’t soften.