By Lydia McNutt
More than 10,500 new condo units* are slated to hit the Greater Vancouver housing market this year, according to MLA Canada's 2017 Market Intel report -- opening up plenty of more-affordable housing options for prospective homebuyers who have been priced out of the single-detached segment.
It's welcome news in the city that has once again taken its usual place atop the unaffordability scale, as per the latest RBC Housing Trends and Affordability Report. Vancouver also ranked third least-affordable housing market worldwide in the 2017 Demographia International Housing Affordability Survey, trailing only Hong Kong, China and Sydney, Australia. And most recently, Canada Mortgage and Housing Corp. has issued another warning, flagging Vancouver's potential housing market risks thanks to overvaluation and the rate of price growth.
Greater Vancouver's hot housing market activity saw its peak in March 2016, followed by a decline before levelling off into 2017. This shift has been attributed to recent provincial and federal policy changes implemented in 2016 -- namely the foreign buyers' tax and the new mortgage rules. While these changes seem to have had their intended effect of cooling Vancouver's overheated resale market, the pre-construction condo market shows little sign of slowing down.
"In December 2016, Vancouver faced a 10-year historical shortage in resale inventory. In addition to this, housing starts are expected to decrease for the next two years with respect to ," Cameron McNeill, co-president of MLA Canada, told YP NextHome. "At the same time, we continue to see strong demand with increasing population, both from other areas of the country and internationally, due to our stable economic growth and job creation."
In simple terms, demand continues to outpace supply.
2016 in review
Approximately 8,955 condos* were released in Greater Vancouver in 2016. Coquitlam led the pack with the most pre-sale units released -- over 1,800, thanks to the completion of the Evergreen Extension in December. More than 87 per cent of the brand new condos released last year in Greater Vancouver were sold, at an average cost of $915 per sq. ft. MLA reports that pre-sales remained strong in the face of the Foreign Buyers' Tax, with 81 per cent of condos released between August and December 2016 being absorbed.
McNeill expects this demand for pre-sale condos to continue. "With the sheer volume of buyers and lack of housing options, demand will still remain strong for Vancouver homes -- especially condos," he says.
"Stability in the single-family market leads to strong demand, and paired with the supply limitations, prices are expected to increase," McNeill says.
While 2016 was a record-setting year, prices are still expected to grow in 2017, though at a much slower pace. "Single-family homes continue to be in high demand and sellers in turn are downsizing into condos, and assisting their children with purchasing a home," McNeill adds.
*Data reported is for concrete construction and does not include wood frame developments. A majority of the projects being built in Greater Vancouver are concrete developments.
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