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The cost of buying a brand new condo apartment in Canada increased a little more during the first months of 2022 thanks to higher demand from purchasers and less inventory on the market.
Statistics Canada recently released its quarterly New Condominium Apartment Price Index (NCAPI) report for Q1-2022, which tracks changes over time in developer selling prices for units in newly-built apartment-style condos. The NCAPI report now covers nine census metropolitan areas (CMAs) — Calgary, Montréal, Ottawa, Toronto, Vancouver, Victoria, Edmonton, Halifax and Québec City.
In Q1-2022, the new condo price composite for the nine CMAs grew 1.8 per cent from Q4-2021. Between the nine urban markets, new condo prices rose in Toronto, Vancouver, Victoria and Québec City compared to the previous quarter. Meanwhile, prices dropped in Halifax, Ottawa and Edmonton, but remained unchanged in Montréal and Calgary on a quarterly basis.
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Compared to Q1-2021, new condo prices rose 7.3 per cent, a trend that was mostly attributed to price growth in Toronto (8.9 per cent) and Vancouver (8.3 per cent). Prices for new condo apartments increased at a slower annual pace for the second quarter in a row in Montréal (3.5 per cent), Ottawa (2.6 per cent) and Victoria (2.4 per cent).
In Q1-2022, Calgary recorded its fifth straight quarter of new condo price increases on a year-over-year basis, which jumped 2.8 per cent.
As a result of the pandemic, real estate demand shifted to larger living spaces between 2020 and 2022 according to Statistics Canada, a pattern that allowed new condos to be more affordable as opposed to single-family dwellings.
“This caused single-family home prices to accelerate faster than condominium apartment prices,” said the NCAPI report. “Increased sales, along with record-low home supply continued to push prices up, leaving condominium apartments relatively more affordable for many buyers in Toronto, Vancouver, Montréal, Ottawa, and Victoria.”
New condo prices rise 4.2 per cent in Vancouver
Quarter-over-quarter, new condo prices increased the most in Vancouver compared to the other CMAs, where they jumped 4.2 per cent in Q1-2022.
According to Statistics Canada, this growth was stimulated by falling inventories and continued demand for new condo units. The inventory situation has also not improved over time. Data from the Canada Mortgage and Housing Corporation (CMHC) shows that the inventory of under-construction condo apartments fell 4.7 per cent quarterly in Q1-2022, the third consecutive quarter of inventory declines.
Higher Vancouver rents have been attracting investors to the city, which has caused the number of available units to drop and for new condo prices to rise.
Chart: Quarterly Price Variations of New Condominium Apartments, Statistics Canada
“As opposed to single-family homes, condominium apartments remained a relatively affordable option for first-time home buyers, but also for investors wanting to jump into a hot rental market,” the report noted.
In addition to Vancouver, the cost of a new unit was also notably up in Toronto and Victoria, where prices increased 1.4 per cent and 1.3 per cent between Q4-2021 and Q1-2022.
According to the Building Industry and Land Development Association (BILD), Toronto reported higher-than-normal new construction sales in January and February. Meanwhile, new condo apartment supply has been quite low, representing about three months of total inventory based on average sales levels for the past 12 months when a balanced market would normally have nine to 12 months of inventory.