(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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Langley author pens Somebody’s Story

Bryan Bellec’s debut coming-of-age novel was inspired by upbringing in Fraser Valley

LETTERS: Public ignoring COVID rules in Langley park

What lessons do children learn when people ignore safety precautions?

LETTER: Langley man wants to see bank machine cleaned

The ATM is a high-touch spot that should be cleaned frequently, a local man argues

Big Brothers Big Sisters Langley is asking participants to sip, support, and survive

Registration for reality-show inspired virtual fundraiser, happening July 20 to 31, is open now

Langley Eats Local challenge promotes homegrown foods and products this summer for 11th year

Residents encouraged to participate in farm gate passport program in a bid to buy local

Horgan says B.C. restart making gains as more people come out of their homes

B.C. announced the easing of more restrictions on businesses, recreation and travel last month

Conservatives say police should be called into investigate WE charity scandal

Trudeau is already under investigation by the ethics commissioner for potential conflict of interest

Amber Alert continues for missing Quebec girls, 6 and 11, and their father

Police issued the alert for Norah Carpentier, 11, and Romy Carpentier, 6, from Levis, Que.

Limit police access to lethal weapons in Indigenous communities: Justice Summit

Grassroots-organized National Indigenous Justice Summit was a free-to-attend two-day videoconference

Wanted Burnaby man arrested in White Rock

34-year-old facing 15 charges, including sexual assault

Canadian policing organization calls for decriminalization of simple illicit drug possession

Canadian Association of Chiefs of Police want policing focus of opioid crisis to be replaced with a health one

Filing deadline in RCMP sexual-harassment class-action extended due to COVID-19

Plaintiffs now have until January 2021 to submit claims for up to $222,000

Jamie Bacon pleads guilty to charge in Surrey Six case

The plea brings an end to a complex legal case that has spanned more than a decade

Hefty undeclared driver charges piling up, ICBC warns customers

Average extra penalty $2,971 after an at-fault accident

Most Read