The residential market in Metro Vancouver in 2024 had mixed results, falling short of optimistic forecasts set by Greater Vancouver Realtors earlier in the year. While there were some gains, they did not meet expectations, causing some market watchers to reevaluate their predictions for 2025.
Missed sales targets
GVR released its H1 forecast for 2025, comparing it to the actual market performance in 2024. At the beginning of the year, there was optimism with a predicted 8% increase in sales compared to 2023, aiming for 28,250 transactions by the end of the year. However, the market closed with 26,561 sales, a 2% increase over the previous year, as the momentum slowed down in the summer due to reduced borrowing costs.
Price gains under pressure
Price growth also fell short of expectations in 2024. The average residential price was expected to rise by 3%, reaching $1,320,000, but the actual increase was only 1.5%, with the year-end average price settling at $1.3 million. Growing inventory levels and weaker-than-expected sales eroded the early gains in the year.
Despite multiple cuts to the Bank of Canada’s policy rate and borrowing costs throughout 2024, supply exceeded demand by the end of the year, reducing the price gains seen earlier in the year.
Looking ahead to 2025
Considering the shortfalls of 2024, GVR’s forecast for 2025 maintains cautious optimism, with key drivers like population growth, household formation, and lower borrowing costs expected to support the market. However, political and economic uncertainties, including potential U.S. trade policies, pose risks to the housing market.
Risks and wildcards
GVR’s analysis suggests that proposed U.S. tariffs on Canadian goods could hinder sales activity, but any negative impacts on home prices are expected to be modest and short-lived. The upcoming federal election in Canada could also impact the housing market, depending on the policies of the new government.
Outlook for 2025
GVR economists anticipate improved momentum in 2025 compared to the previous year, with lower borrowing costs expected to boost demand. Sales are projected to reach 30,250, a 13.9% increase over 2024, and the average home price is forecasted to grow by 4.1%, reaching $1,354,000.
GVR’s outlook for 2025 acknowledges that unexpected economic recovery could accelerate sales and price growth, while high inventory levels or recessionary pressures could dampen performance.
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