Run-off of Vancouver's hot real estate market has led to a real estate boom in Kelowna, says a new market research report.
The Royal LePage House Price Survey and Market Survey Forecast released Thursday revealed double-digit increases in Kelowna in the fourth quarter of 2016. In the final quarter of the year, the aggregate price of a home increased a notable 14.9 per cent year-over-year to $577,820.
When broken out by housing type, the region saw double-digit gains across all housing categories. In the fourth quarter of 2016, the median price of a two-storey home rose 14.4 per cent year-over-year to $672,041, while the median price of a bungalow rose 13.8 per cent to $536,907. During the same period, condominiums rose a notable 20.9 per cent year-over-year to $389,691.
"As the largest city in B.C.'s Okanagan Valley, Kelowna is widely recognized as an ideal place to live, work and retire due in part to its pleasant year-round weather conditions, steady economy and balanced lifestyle," said Francis Braam, owner and broker, Royal LePage Kelowna.
"The attractiveness of our region, coupled with our affordability in comparison to Vancouver, is bringing a number of homebuyers into the Kelowna region, which has placed upward pressure on house prices."
Looking forward to 2017, Braam believes sales activity in Kelowna will continue to be strong, though at a slower pace than what the market saw in 2016. He expects that the slower market in the Vancouver region may result in less buyers coming from the Lower Mainland. Braam also does not foresee an exodus from the region, which would contribute to low inventory levels and increased pressure on house prices.
Nationally, Canada's residential real estate market saw significant year-over-year price appreciation in the fourth quarter of 2016, supported by considerable gains in the Greater Toronto Area and Greater Vancouver.
Looking ahead, Royal LePage expects the regional extremes in house price appreciation that characterized the national real estate market in 2016 to narrow in 2017. This trend is anticipated to be driven primarily by a price correction in the Greater Vancouver housing market, strong but moderating price appreciation in the GTA, and welcomed upward price trends in Quebec, Atlantic Canada and Alberta.
The price of a home in Canada increased 13.0 per cent year-over-year to $558,153 in the fourth quarter of 2016 – the highest year-over-year national home price increase recorded in over a decade. The price of a two-storey home rose 14.3 per cent year-over-year to $661,730, and the price of a bungalow increased 12.5 per cent to $481,460. During the same period, the price of a condominium increased 7.4 per cent to $356,307. Looking to the year ahead, Royal LePage forecasts that the aggregate price of a home will increase 2.8 per cent in 2017 when compared to year-end, 2016.
"The disparity in home price appreciation between Canadian regions has never been greater than that seen in 2016, with rates ranging from double-digit extremes in some cities to negative growth in others," said Phil Soper, President and CEO, Royal LePage.
"This economic drama put real estate at the forefront of everybody's mind last year, from the Prime Minister to the recent grad. In 2017, we anticipate a movement away from the regional extremes of real estate feast and famine – and that is a very good thing."
For the Canadian real estate market, 2016 was marked by a slew of new public policy initiatives at national, provincial and municipal levels.
"While efforts to address deteriorating affordability in Ontario and B.C.'s largest metropolitan areas are well-intentioned, too many new taxes and regulations, by too many levels of government, introduced within such a short timeline and with perceivably little research and consultation, have caused confusion and triggered drops in consumer confidence, risking the long-term health of Canada's housing market," said Soper.
"Price appreciation disparities between regions have created a quandary for policymakers who have tried to tame overheated housing markets, while supporting slower ones. What our leaders have been slow to address, and what is at the heart of the matter, is the supply side of the equation in the country's hottest markets. Housing shortages have put immense upward pressure on prices."