BC’s housing market experienced a sharp drop in the number of home resale units over the last year due in part to last year’s 15% foreign-buyer tax, but is recovering quicker than experts had previously expected, according to a new RBC housing market forecast.

Home prices are expected to increase slightly in both 2017 and 2018, and there will be a smaller-than-previously-anticipated drop in annual resales.

According to the updated forecast, there will be 99,400 home resale units over 2017, a 11.4% decline in sales from 2016. In 2018, RBC expects 91,600 resale units, which is a 7.8% decline from 2017.

The forecast’s softer drop in annual resales for 2018 reflects the province’s slow recovery despite the sharp decline in home resales that came from policy changes like the 15% foreign-buyer tax introduced last year.

Home prices in B.C. will rise slightly this year and into next year, with an aggregate measured price of $747,200 for 2017, a 2.3% increase from 2016 and will increase to $758,500 in 2018.

RBC still expects poor affordability and rising interest rates to continue for BC in 2018, keeping the number of home resales on a downward trend and containing the pace of price increases to low single-digits.

However, the most significant changes since March took place in Ontario, where overheating of the market in Q1 of this year prompted a major policy change by the provincial government in April called the Fair Housing Plan, a package of actions to address housing affordability in the province.

According to RBC, the plan’s effect in dropping the number of home resales will be largely sustained, even though it believes the drop to be temporary (from six to nine months). Like in BC, rising interest rates and poor affordability will come into play once Ontario’s market has adjusted to policy changes.

RBC projects a moderate decline in Ontario home resales in 2017 and 2018. It boosted its projected annual price increases in Ontario from 9.3% to 14.0% in 2017 to reflect the down spike in resales that took place earlier this year.

Besides notable changes for Ontario and BC, not much has changed in forecasts for Canada’s national housing market since RBC’s last housing market forecast in March.

RBC : BC’s Home Resales Continue Slide After Implementation of Foreign-Buyer Tax by Sean Yoon | Business in Vancouver