British Columbia saw a healthy economy last year when compared to the other provinces. This was largely due to a hot housing market and a global demand for B.C’s commodities. We do not see that pace being kept up in 2022 though.
The Royal Bank of Canada – RBC forecasts a 4.2% expansion for the West Coast economy. This shows a decrease from 2021’s 5.9%. British Columbia registered its highest rate of economic growth of the four Canadian provinces. Its increase was second to Prince Edward Island.
The report from Carrie Freestone and Robert Hogue notes that British Columbia will fall to the middle of the pack this year along with Quebec at +3.6% and Ontario at +4.1%. The market leaders will now be Manitoba, Alberta and Saskatchewan. Manitoba is seeing an increase of +4.8%, Alberta seeing +5.7% and Saskatchewan seeing +6%.
2021 vs 2022
Rising interest rates will also affect home resale activity moderately. This will lead to a broadening of the cooling to other regions. With affordability rapidly deteriorating across Canada and especially in expensive markets, property values will be increasingly more difficult to sustain.
We believe that home prices have already reached their tipping point in a number of markets. British Columbia being one and Ontario being the other as well. Slower activity will reduce the contributions made to the economy by the housing sector that was brought on during the pandemic.
The average MLS price for British Columbia in April was $1.065 million. That shows a 12.9% from the $943,765 in the same month in 2021. This year, the projection is a decline to 97,240 units. This is a 22% percent decrease from the record highs of 2021. This is the information provided by the BCREA’ forecast which was released on May 31st.
MLS sales are forecasted to fall an additional 12.4% which is a decline of 85,150 units between 2022 and 2023.
RBC’s Report Forecast on British Columbia
The report forecasts the province of British Columbia will have the lowest rate of inflation in Canada after tallying the numbers. The percentage is 5.4% for British Columbia whereas the national average is 5.8%.
As of April of 2022 inflation sat at 6.7% – this is the most recent month for which data was released for the West Coast. It is expected that the inflation will gradually decrease across the nation later in the year. We can thank energy prices for stabilizing and high interest rates for tempering the demand by consumers.
The forecast also predicts the resource sector capital investment including a number of LNG projects which will boost the economy of the province.