B.C.’s inflation rate slowed in September on a year-over-year basis to two per cent from 2.4 per cent in August. While the highest rate among provinces, it was the lowest inflation reading in more than three years. Core inflation (excluding food and energy) declined from three per cent to 2.6 per cent.
Lower gas prices were the main reason for the slowdown, when considering the all-items consumer price index. On a year-over-year basis, gas prices declined by 12.2 per cent. This was the fourth consecutive reduction and was likely due to lower crude oil prices as the global economy slows. Energy prices also dropped by eight per cent and transportation costs fell year over year by 0.8 per cent.
Shelter prices remained elevated but slowed significantly on a year-over-year basis, up 5.4 per cent, down from a rate of 6.4 per cent in August. Contributing to elevated growth were high rent and owned accommodation costs. Services price growth meanwhile slowed considerably, up by 3.7 per cent in September as opposed to 4.7 per cent in August. Food inflation was the same as where it was in July and August, at 2.8 per cent.
On the housing front, there were mild signs of thaw in the market owing in part to interest rate cuts. B.C seasonally adjusted MLS home sales ticked higher in September to just over 6,000 units, up by 0.6 per cent from August. However, year over year, sales declined by 1.8 per cent as the downward trend in home purchases persisted.
Sales performance was mixed across the B.C. real estate boards. The Greater Vancouver Real Estate Board posted an increase in home purchases during the month, up by three per cent in September but down by 5.2 per cent year over year. Other areas with sales growth included Vancouver Island (up 3.4 per cent) and the Kootenays (up 10.7 per cent). In contrast, sales fell significantly in the Okanagan Mainline (down 17.2 per cent) and South Okanagan (down 16.5 per cent). Chilliwack also reported a 3.3-per-cent dip in monthly sales, while sales pulled back in Kamloops by 1.5 per cent.
Home prices in B.C. showed no change in September, coming in at approximately $970,000. This was 9.1 per cent below peak in February 2022. Home values in Greater Vancouver continued to fall, decreasing by 0.6 per cent monthly, and down year over year by 3.3 per cent. Home prices rose in the Kootenays (up 4.8 per cent), Vancouver Island (up 1.3 per cent) and Kamloops (up 0.2 per cent).
New residential listings in B.C. increased by 3.5 per cent, and market conditions remained nearly balanced with a sales-to-new-listings ratio of 43 per cent. While still subdued, activity is expected to rise amid further rate cuts and modest improvements to affordability.
Meanwhile, B.C. housing starts rose sharply by 28 per cent to a seasonally adjusted annualized pace of about 40,600 units. Multi-family starts were up 34.5 per cent to nearly 36,300 units, while single- family starts were down 7.8 per cent to 4,300.
Year to date, the number of housing units started in B.C. fell eight per cent. Housing construction intentions will remain sluggish owing to fewer pre-sale transactions and what continues to be a challenging construction market.
Bryan Yu is chief economist at Central 1.
