Photo: Joe Goldberg/Flickr
There’s no slowing demand for condos in Metro Vancouver’s hot market, at least for now.
According to two Vancouver realtors, the market continues to show its strength, despite stricter mortgage regulations that came into effect this year and higher interest rates.
“The changes that have been brought in with respect to mortgage qualification, and even the recent announcement on the interest rate hike from the Bank of Canada, don’t seem to be fazing anybody,” Vancouver realtor Aaron Jasper tells BuzzBuzzNews.
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As of January 1, the Office of the Superintendent for Financial Institutions’ (OSFI) new mortgage qualification stress test came into effect. All uninsured mortgage borrowers are now required to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract mortgage rate plus an additional two per cent.
When news about the stress test broke in October 2017, many buyers appeared to rush into the market ahead of the New Year.
In December 2017, residential sales in Greater Vancouver were up 17.6 per cent compared to a year ago, according to the Real Estate Board of Greater Vancouver (REBGV).
Although it has been almost a month since the introduction of OSFI’s stress test, Vancouver realtor Adil Dinani says momentum has continued from last year into 2018, particularly in the condo segment.
“While the stress test may have taken a bit of steam out of the market, there was such a strong wave going into 2018 that it would take something substantial to cool that end of the market down,” Dinani tells BuzzBuzzNews.
In addition to tighter mortgage regulations, the Bank of Canada increased the overnight rate, which influences mortgage rates, on January 17th for the third time since July 2017. The rate now sits at 1.25 per cent.
But this multitude of headwinds is not appearing to have an impact on the market yet, says Jasper.
“It’s very competitive and the condo market in particular in Vancouver just seems to be business as usual, as crazy as it was last year,” notes the realtor.
However, fierce demand continues to be met by limited supply in the region.
With buyers flocking to the condo segment, prices are continuing to rise, says Dinani.
According to REBGV, as of December 2017, the benchmark price of a condo in Greater Vancouver was $655,400, up roughly 26 per cent from December 2016.
Going forward, Jasper expects momentum to continue in the condo segment, however another property type might lead demand this year.
“It’s very competitive in the condo market, but even that much more competitive in townhouses and duplexes,” he says.