The mortgage stress test is expected to continue to put a damper on any major price increase in B.C.’s housing market throughout 2019, according to the B.C. Real Estate Association.
In a first quarter forecast update released Monday, the association said the test is expected to continue “constraining” housing demand this year.
The stress test, introduced at the start of 2018, requires all borrowers to 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 applies to all mortgages, new or renewed, even if the down payment exceeds 20 per cent.
The average price of a home in B.C. stayed mostly steady, up just 0.5 per cent to $716,100, in the first quarter of 2019.
The association expects 80,000 units will sell by the end of the year, compared with 78,345 last year.
— Kat Slepian (@katslepian) February 25, 2019
Although the province has seen five years of “above-trend economic growth,” and has the lowest unemployment in Canada – spurring on housing demand – the association said job growth will likely slow down in the coming years.
That shift will push down the province’s gross domestic product from 2.8 per cent to 2.6 per cent in 2019, leading to a slight downturn in housing demand.
That, mixed with the record number of new homes being built this year, will keep any housing shortages at bay.