B.C. home prices set to hit another record high

Average home prices in British Columbia are expected to surge to yet a new record high by the end of the year, according to a report released Thursday.

Bryan Yu, an economist with Central 1 Credit Union, said the median home price in the province will increase 6.8% to $417,000.

Average home prices in increasingly pricey Vancouver are likely to hit $521,000 by the end of this year, an increase of 8.5% compared to last.

However, as the housing market storms ahead, Mr. Yu says concerns of a possible bubble in that city are overblown.

“Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust,” he said in a statement.

He noted that price jumps have been in localized areas and not region-wide.

As prices continue to climb, sales are expected to lag slightly this year compared to 2010, according to the report.

Total home sales are expected to drop slightly less than 1% to 88,200 units by the end of the year.

The report predicts resale home sales will continue to steam ahead, increasing by 4.7% compared to 2010, but new home transactions will be down 26%.

As for 2012, the report predicts total home sales will be up, growing by about 3.4% and driven by new home sales, while resale homes will decline.

The report says a dramatic decline in sales is unlikely because mortgage rates remain low.

“The real estate market will remain stable for the next couple years, weighed down by economic issues, moderate employment and population growth and changes to mortgage insurance rules,” Mr. Yu said.

British Columbia’s plans to scrap the Harmonized Sales Tax will likely result in some buyers delaying purchases until 2013, the report said.

“People looking at new homes priced over $525,000 may very well wait until the tax changes lower the 12% hit they face,” Mr. Yu said.

Source: The National Post