Reviewing 2023: A Market of Tenacity Dominated by Interest Rates

In 2023, Vancouver's real estate market defied predictions by finishing the year with positive price growth, despite facing the highest borrowing costs in over a decade. According to the Real Estate Board of Greater Vancouver, the composite benchmark home price index for all residential properties in the city concluded the year at $1,168,700. This reflected a 1.4% decrease from November but a significant 5% increase from December 2022. However, this price resilience occurred alongside a notable decrease in sales.

Start of 2023

The early part of 2023 witnessed two rate holds by the Bank of Canada, creating false impressions that the rate-hike cycle was concluded. This led to a temporary surge in home prices during the spring, accompanied by heightened inflationary pressure. Subsequently, the central bank implemented two additional quarter-point rate hikes during the summer.

Despite this, both markets and economists appeared optimistic that 2023 marked the peak of interest rates, with expectations of rate relief and potential cuts by mid-2024.

Inflation Stats

Simultaneously, there was a parallel trend of declining inflation. Starting the year with Canada's headline Consumer Price Index inflation at 5.90%, it slowed to 3.10% by November.

Residential Property Prices

The average non-seasonally adjusted house price reached a peak of $729,044 in May but receded to $646,134 by November. While still exhibiting a 5.5% increase from January, this figure represented a decline of more than 20% from the all-time high recorded in February 2022.

Real estate trends are largely influenced by prevailing economic conditions, and in 2023, the Canadian real estate market experienced fluctuations due to the three interest rate hikes by the Bank of Canada.

Home Prices Forecast

Looking ahead to 2024, most experts and analysts anticipate a gradual recovery in the Canadian housing market as interest rates stabilize.

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*Original article from Stilhavn Real Estate Services.