Photo: Kenny Louie/Flickr
Metro Vancouver’s new condo supply is struggling to keep up with demand in 2017.
Available inventory for new condos in the region equated to less than one month’s supply during the first six months of the year, according to Altus Group’s Vancouver Flash report, published on Wednesday.
“From a supply standpoint, we had twice as many homes available last year than this year so the market is basically at capacity,” Matthew Boukall, Altus Group’s residential product manager tells BuzzBuzzNews.
The real estate data provider’s annual report discusses residential and commercial real estate trends observed throughout the year.
Boukall says sales activity was strong in the first six months of the year and is expected to continue throughout the fall.
“Interest from buyers, price growth and individual project sales are strong, if not stronger this year than last year,” says Boukall.
However, demand is being met by limited supply in the region, especially for more affordable condos and townhomes.
At mid-year, there were fewer than 1,800 units in available inventory in Metro Vancouver, which Altus says is significantly low in historical terms.
Although condo and townhome construction starts are at record levels, demand this year was met by fewer condo project openings compared to 2016. According to Altus, in the first six months of the year, 36 condo developments opened — almost half of the 65 project openings from a year ago.
“Last year was such a great sales year that all the inventory was absorbed and this year it’s been more challenging to get that inventory back into the market at the same level,” says Boukall.
To cater to the demand, Boukall says many developers are hurrying to release more product before the new year.
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“One of the things we’ve been seeing this fall is a lot of developers have been trying to launch projects or are intending to launch projects by November to get ahead of the mortgage rule changes coming effective January 1st,” says Boukall.
In fact, Altus forecasts that about 2,400 condo and townhome units will be launching between the last week of October and the end of November.
As a result of limited supply in the first half of the year, condo prices surged by about 15 per cent overall from a year earlier, says Altus.
“We’ve seen substantial price growth again this year where the average high-rise condo launch has been over $1,000 a foot,” says Boukall.
According to Altus, first-time buyers resorted to Burnaby for less expensive property outside of the City of Vancouver. In 2016, Burnaby had the most condo sales in the region, followed closely by the City of Vancouver.
However, as prices continue to rise in Burnaby and surrounding suburbs, Boukall says first-time buyers are opting for other markets in the Lower Mainland.
“The first-time homebuyers who are now priced out of some segments of the market are now chasing affordability down to Coquitlam, Port Coquitlam, into Langley and Abbotsford,” says Boukall.