Doubts around how aggressive BoC will be are 'fuelling' housing activity: Realtor
Sales of condominiums across Canada fell in all but two major markets in the first eight months of 2023, according to a new report which predicts the slowdown will continue into 2024.
The RE/MAX 2023 National Condominium Report, released Tuesday, examined dozens of communities in seven of Canada’s largest population centres. It found that only Edmonton and Calgary have seen a year-over-year increase in condo sales so far this year.
Otherwise, sales fell in Greater Vancouver, the Fraser Valley, the Greater Toronto Area, Ottawa and Halifax-Dartmouth, according to the report.
The president of RE/MAX Canada said national condo sales were a “mixed bag” this year, as the market saw some momentum in the second quarter and again in September following an interest rate pause by the Bank of Canada.
“The most recent inflation numbers extinguished the flame,” said Christopher Alexander in a press release on the report’s findings.
“Lifecycle sales will continue to contribute to steady activity, but a comeback similar to that of the second quarter is likely out of the question.”
OUTLIERS IN ALBERTA
Despite falling sales across much of the country, Calgary saw a substantial 22 per cent increase compared to the first eight months of 2022, while Edmonton sales edged up three per cent, according to the report.
RE/MAX Canada cited interprovincial migration as a “significant factor” in Alberta markets, as condo affordability and lower living costs drew buyers from more expensive provinces.
In addition to welcoming 35,932 new international migrants so far this year, Alberta became home to 15,786 interprovincial migrants, the highest level since 2000, the report said.
Both Edmonton and Calgary are expected to see upward pressure on condo values in the near future as demand continues to grow, the report added.
The report found that affordability remains the top concern for condo markets across the country, noting that carrying costs are “proving prohibitive” for many perspective buyers.
“Brokers in several markets noted that current qualifications for mortgage financing are a roadblock to home ownership, given the stress test adds another two per cent to already high posted rates,” RE/MAX Canada said in the release.
“Not surprisingly, the most active areas in every market are often those areas where affordable condominium product can be found. First-time buyers and investors remain most active in condominium markets, with lower price points doing well virtually across the board.”
The report also found that more and more buyers are willing to purchase condos further from their preferred location in order to get better “bang for their buck” – even if that means moving out-of-province.
With condo prices out of reach for many would-be buyers, construction has slowed considerably in almost every market, according to the report.
“In some cases, city approvals have slowed the process, but in most cases, the financial viability of the project just doesn't make sense in the current economic environment,” RE/MAX said.
RE/MAX Canada’s executive vice president said he expects a “softer end” to the year in the condo market, as buying power and consumer confidence remains low.
“Savvy buyers will find some opportunity in larger markets, and although some further softening in values is anticipated in most centres, the impact will be somewhat tempered by the tight rental market and continued population growth,” said Elton Ash in the release.
“Look for condominium sales to rebound in the second or third quarter of 2024, as quantitative tightening eases, re-invigorating homebuying intentions.”