In the year of 2018, the real estate market in Nanaimo showed four trends:
- Price rose but sales declined;
- Price of higher end properties decreased while that of lower end market still increased;
- Market went up for the first half of the year and went down for the second half;
- Inventory increased
These four trends are all different from2016 and 2017, and will be explored in more detail below.
Price Rose but sales declined
Table 1: 2014-2018 Price and Sales Information of Detached Home, Townhouse, Apartment and Vacant Land in Nanaimo
As can be seen from Table 1, average prices of the four major types of residential properties: vacant land, detached houses, townhouses and apartments, all increased in the year of 2018. However, except apartments, the sales volume of all the other three types have dropped. For detached single family homes, the sales decreased by 24.49% compared with 2017, reaching the level of 2014.
Price of higher end properties Decreased while that of lower end market still Increased
Table 2: 2014-2018 Price and Sales information of Oceanfront , Acreage Single family Homes in Nanaimo
Generally speaking, acreage and Oceanview houses represent medium to high end properties. Single family homes are medium priced properties and townhouses and apartments are medium to low priced properties.
From Table 1 and 2, two obvious phenomena can be found:
1, Higher end homes experienced slower price increase, while lower end homes have much higher rate of price increase. This is very different from 2016 and 2017. In those years, higher end homes appreciate much faster than lower end homes. While in 2018, this is just in the opposite situation. The price growth rates order is reversed. The prices of acreage and ocean view houses even dropped.
2, the sales volume of higher priced properties decreased while lower priced properties increased. The sales for acreage, detached house, ocean view detached house, townhouse, dropped by 34.33%, 24.49%, 24.39%, 18.25%, respectively compared with 2017. Only the sales of apartments increased by 3.42%., while all the other types of properties decreased. Higher end properties have much more dramatic sales volume decrease.
Market went up for the first half of the year and went down for the second half
Chart 1: 2018 Monthly Average Price and Transactions for Single Family Homes of Nanaimo
As can be seen from Chart 1, in 2018, the main type of residential properties, detached house, has experienced obvious trend of rise and decline. From January to May, both the price and sales increased prominently; but from June to Sep, although the price increased a little bit, the sales decreased in some degree; while from Oct to Dec, both price and sales dropped dramatically. In addition to the seasonal factor, another reason of the decrease is the new policies. Overall, the whole trend is similar to the previous two years, however, the drop of the price and sales in the latter part of the year should be noticed.
Chart 2: 2017 Monthly Average Price and Sales for Detached Homes Nanaimo
As showed in Chart 2, in the year of 2017, the price of detached homes of Nanaimo has seasonal fluctuations. In 2017, the market went up after the early spring and prospered until June, then drop down a little bit in July and August, then heated up again in the fall, and went down at the end of the year.
The similar seasonal trend also could be found in most of the previous years. Taking 2016 as another example, as showed in Chart 3, we can see the seasonal trend more clearly.
Chart 3: 2016 Monthly Average Price and Sales for Detached Homes Nanaimo
The market performs better for the half of the year and goes weak for the second half can be considered as the overall seasonal trend of Nanaimo Real Estate market. However, this trend is much more significant in 2018. Apart from seasonal reason, policy factors contributed to this trend to a great extent.
Increase of inventory
In the past two years, Nanaimo’s inventory has reached historical lows. At the end of 2016, the inventory of the entire Vancouver Island, including Nanaimo, fell to a 10-year low. At the end of 2017, the ownership of the entire Vancouver Island has reached a new low.
In the past two years, the inventories fell a record low. At the end of the 2016, for the whole Vancouver Island including Nanaimo, supply of homes dipped a record low in the past ten years. At the end of 2017, inventories hit a new historical low.
Table 3: Vancouver Island, 2015-2018 inventories of all types of properties
From Table 3, we can see that at the end of 2018, supplies increased compared with the end of 2017. The situation of supply shortage has been relieved to some extent.
Table 4: Nanaimo 2015-2018 Comparison of Year End Stocks of All Types of Real Estate Properties
As far as the Nanaimo real estate market is concerned, as shown in Table 4, the number of properties in each type at the end of 2018 has increased by a certain margin compared with the end of 2017. However, except strata townhouses, the inventory of the other four real estate types are still far below the level of the end of 2015.
Nanaimo Real Estate Housing Price Trend in 2019
In the 2017 Nanaimo Real Estate Report, I made a prediction of the real estate market in 2018, which is “In 2018, BC and even Canada’s national real estate policy will still have an important impact on Nanaimo’s real estate market. From the past situation, Nanaimo tends to be a beneficiary of the regulation. Although in 2017, Nanaimo’s housing price has increased significantly compared with 2016, it is still significantly lower than Vancouver, a city on the other side of the strait. In the case of single family homes, the former is less than one-third of the latter’s price.”
There are two key words: “policy” and “price difference” were influencing Nanaimo’s real estate market in the year of 2018.
On one hand, from the perspective of the keyword “policy”, in 2018, there are three major policies related to Nanaimo Real Estate market: 1. mortgage stress test. On January 1, 2018, Canada began to implement loan stress testing and Nanaimo was no exception. 2. BC Additional Property Transfer Tax. In July 2016, Vancouver began to implement Additional Property Transfer Tax on all foreign entities. In February 2018, major and medium-sized cities in BC began to implement this tax, and Nanaimo was included. 3. BC real estate speculation and vacancy taxes. In October 2018, major and medium-sized cities in BC began to implement speculation and vacancy tax, and Nanaimo was included. These policies were implemented in Vancouver and Nanaimo simultaneously.
On the other hand, from the point of view of the keyword “price difference”, it is because of the large price difference between Nanaimo and Vancouver real estate, when Vancouver’s detached housing price declined in the whole year of 2018, Nanaimo’s price of detached homes increased on the contrary. However, this gap is now shrinking. The difference between the average prices of Nanaimo and Vancouver’s detached houses in December 2016, December 2017, December 2018 is offered below.
Looking forward to the Nanaimo real estate market in 2019, my predictions are as follow: First, from the policy point of view, Nanaimo is gradually losing its advantage compared with Vancouver. Second, as for the price difference, compared with Vancouver, the advantages still exist, but the gap is gradually decreasing. Therefore, in 2019, Nanaimo’s real estate market is likely to return to the status of Vancouver’s shadow market. In addition, in 2019, policies will still have a major impact on Nanaimo’s real estate prices.
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