British Columbia continues to be one of the most sought-after places to live, work, study and retire, from the metropolitan vibes of Vancouver to the rural communities in the north. The western province has it all, including some of the most expensive real estate in Canada. The Victoria housing market is one region that’s experiencing an impressive boom. Indeed, Victoria real estate has always been desirable, with the municipality offering easy access to the sights and sounds. Suffice it to say, Victoria encapsulates everything that is sublime about British Columbia.

The skyrocketing demand for homes over the last couple of years, plus limited inventory, has also made it one of the most expensive housing markets in both the province and the rest of Canada.

So, how is it doing lately? Like many other markets in Canada, sales are down and prices are up.

What’s the Latest in the Victoria Housing Market?

According to the Victoria Real Estate Board (VREB), residential property sales tumbled at an annualized rate of 26.2 per cent in April, totalling 824 units. However, home sales dipped at a tepid pace of 1.1 per cent on a month-over-month basis.

In the Victoria housing market, the two main property types – single-family homes and condominiums – also declined in April. Single-family home sales plunged 28.5 per cent (403 units sold), while condo sales dropped 20.8 per cent (262 units sold).

Price growth was exceptional to kick off the second quarter of 2022. The Multiple Listing Service® (MLS) Home Price Index (HPI) benchmark value for a single-family property advanced 26.9 per cent year-over-year to $1,266,200. Condo suites also enjoyed a notable increase in prices, with the benchmark value climbing at an annualized rate of 26.7 per cent to $650,200.

New listings were up month-over-month, but they were down from the same time a year ago. VREB data show that active listings increased 28.4 per cent year-over-year to 1,365 units. But from March to April, active listings tumbled 6.1 per cent. In short, inventory levels are below historical averages, and this trend is supporting surging housing prices.

The past month concluded with notably lower sales when compared to April of last year,” said 2022 Victoria Real Estate Board (VREB) President Karen Dinnie-Smyth in a news release. “This tells an interesting story because activity traditionally peaks over the course of the spring, and this year we have seen a gradual softening of the market. As we have reported many times in the past years, the market hinges on supply and demand.”

However, new housing construction has failed to keep up with demand so far this year. According to Canada Mortgage and Housing Corporation (CMHC), housing starts plummeted close to 80 per cent year-over-year in March, totalling 121 units. In the first three months of 2022, housing starts have clocked in at 820, down 15 per cent from the same period a year ago.

Still, VREB notes that the Victoria housing market is experiencing new developments this year, from competition for lower-priced homes to diminishing demand. At the same time, Dinnie-Smyth thinks it is important that new supply continues to come online.

We must continue to encourage the government and stakeholders to focus on building more homes and not on creating new rules such as a cooling-off period that have nothing to do with getting more people into homes and risk upward pressure on pricing,” she added in a statement. “The market will continue to have corrections, both up and down, and government interventions must target more new doors for the long-term health of our housing market.”

Is There a Price Correction on the Horizon?

In a new housing report from the Royal Bank of Canada (RBC), the bank says rising interest rates could potentially lead to a “modest price correction” in the Canadian real estate market, with British Columbia and Ontario witnessing the most significant declines.

The bank projects that the aggregate benchmark price could slip 2.2 per cent nationwide this year, falling to $776,900. B.C. is forecast to drop 3.8 per cent, while Ontario is predicted to witness a 2.3-per-cent decrease.

We expect downward price pressure to be more intense in Vancouver, Toronto and other pricey markets,” assistant chief economist Robert Hogue wrote in RBC’s latest housing outlook. “By comparison, we expect activity and prices to be more resilient in Alberta, where local markets have more catching up to do following a prolonged slump before the pandemic.

This year, the Bank of Canada (BoC) has been aggressive in tightening monetary policy, raising its benchmark interest rate three times already in 2022, and warning that more measures are on the way to cool Canada’s spiralling inflation rate.