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Rising construction costs, slowing market set stage for 2019

By Peter Mitham for Business in Vancouver

By the time you read this, most property owners will know what the BC Assessment Authority thinks their property is worth – or was worth, as of the valuation date of July 1, 2018. However, interest rate hikes, government policies and other factors have helped keep prices in check in recent months.

The benchmark price for residential properties handled by the Real Estate Board of Greater Vancouver fell from $1,093,600 at the end of June to $1,042,100 at the end of November, a 4.7% drop. Assuming even a modest decrease in December, the benchmark will be down more than 5% in the latter half of the year.

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While the BC Real Estate Association (BCREA) remarked in August that “the downturn in housing demand induced by the mortgage stress test is now largely behind us,” it had changed its tune by early November. RBC Economics followed in December, reporting that the effect of higher qualification requirements and interest rate hikes continues to be felt.

“Market dreariness is here to stay for a while,” it dourly observed. “We expect low temperatures to persist over the coming year as rising interest rates, the mortgage stress test, market-cooling measures in B.C. and stretched affordability continue to exert significant restraint on homebuyer demand.”

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