The chief economist for Central 1 Credit Union predicts Kelowna’s housing market will see significant growth over the next 25 years.
Helmut Pastrick spoke at a Kelowna Chamber of Commerce luncheon last month, outlining what he sees as the future of real estate in the city.
With the region’s population projected to increase by 40 per cent over the next two-and-a-half decades, Pastrick said the number of households here will increase by almost half.
That’s because demand for property in the Central Okanagan will almost certainly outstrip the available supply. Pastrick says that will mean a considerable upward trend in house prices.
“Prices will more than double in the next 25 years, and that’s probably a low estimate. Quite frankly, it wouldn’t’ surprise me to see something much higher than that,” he said.
Kelowna realtor A.J. Hazzi adds that, even in the short term, the market looks fairly solid.
“All of the major banks and economists have been consistently on the conservative side on market. They are predicting moderate growth for 2018, but I am more bullish. I expect to see between five and eight per cent growth by the time the mid year Vantage Report is released,” he says.
In the meantime, Pastrick said the Central Okanagan economy remains strong, with more than 10 per cent employment growth, and almost 9 per cent population growth from 2011 to 2016.
The population numbers almost double those of Canada as a whole.
Hazzi argues those factors have helped contributed to the strong real estate market in the region.
“The two biggest drivers of our real estate market are jobs and Inward migration, and the numbers shared by Helmut are strong enough to overcome the OSFI stress test and the rate hike by the bank of Canada,” he says.
Pastrick pointed out that all market booms will inevitably be followed by a slowdown, bue said he hopes to see the current market cycle end with a “soft landing.”
He said there’s a 30 per cent possibility that, as house prices continue to rise, federal regulators will “tighten the screws,” implementing stricter policy measures that begin to deflate housing prices.
If things go well, he says, the market balance will steadily shift towards buyers, and house prices will dip only slightly as the market corrects.
Hazzi says he believes the conditions exist to see such a scenario play out.
“Without the market influences of interest rates, new legislation and the negative media sentiment, our market would be what we call a ‘runaway market,’ like Vancouver or Toronto. Twenty per cent growth years are not sustainable, 5-8 per cent is the kind of sustainable growth we should all be cheering for,” he says.
This article is written by or on behalf of the sponsoring client and does not necessarily reflect the views of Okanagan Edge.
All Think Local Stories