Demand remains strong at a provincial level with BC home sales continuing to trend above the 10-year average in June.

But robust demand has been met with limited supply, causing the province’s average home price to rise 4.4% year-over-year last month to $725,778, according to the British Columbia Real Estate Association’s June 2017 data release published on Thursday.

“The one real challenge, really all around the province is supply, where listings just aren’t keeping up with sales so that means pretty tight market conditions and upward pressure on prices,” BCREA Economist Brendon Ogmundson tells BuzzBuzzNews.

Last month, total active listings totaled 29,651, down 6.2% from June 2016. Sales-to-active listings also dropped in June to 39.4%, compared to 40.8% in June 2016.

After experiencing record home sales in early 2016, activity in Greater Vancouver cooled after the provincial government implemented a 15% foreign-buyer tax for the region.

However, the effects of the tax were short-lived as this year the market showed signs of rebounding.

In June, sales in Greater Vancouver dropped 12.2% year-over-year to 3,953, but Ogmundson says the region’s transactions are still above average levels.

Last month, areas in Northern BC and the Kootenays saw a noticeable gain in year-over-year sales at a 10.5 and 28.5% increase, respectively.

But with limited supply these areas are struggling to keep up with the demand.

“When you get a chip in demand like that, like a real jump up in demand fairly suddenly, it’s very difficult for supply to keep up. So demand and supply can be really out of whack in the short term because it takes a long time obviously to build up the housing stock and meet that demand,” says Ogmundson.

Even though BC’s total property sales are trending above the long-run average, fewer transactions occurred in June compared to a year ago. A total of 11,671 homes sold across the province last month, a 9.6% drop from June 2016.

Meantime, total sales dollar volume decreased 5.6% to $8.47 billion compared to a year ago.

Year-to-date, a total of 54,830 homes sold across the province in BC, down 18.6% from a year ago. The average year-to-date price of a home was $712,993, a 3.8% drop compared to the same time last year.

BCREA : Robust Demand Drives BC Home Prices Up in June by Kerrisa Wilson