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What do we have in store for the Lower Mainland condominium market in 2016? It certainly looks like it will be another scorching year. With demand for the increasingly rare single-family home continuing to push many buyers out of that market segment, it is likely that more and more house hunters – from first-timers to families – will turn to condominium living in 2016.
That’s likely to result in higher condo sales (even higher than the 45 per cent-plus annual rise in 2015), higher output from developers to meet demand, and higher average condo prices as soaring land values hit developer costs. But those averages will mask wide neighbourhood variations, from high-end units in some places to affordable options in others.
Another interesting point is that, as of this month, New Westminster is the first B.C. municipality to demand a minimum of 30 per cent of new condos to have two or more bedrooms, and a minimum of 10 per cent to be three or more bedrooms. This is a move that has troubled developers, who find it hard to make the financials work on such units, but the City hopes it will ultimately provide more affordable options for family living.
And what about measures by Ottawa to cool off Canada’s hottest markets? Well, the new minimum down payment rules being implemented in mid-February are unlikely to make a dent our market. It could mean that some homebuyers can’t come up with the extra cash, if they had been planning on putting the minimum of five per cent down on a condo that costs more than $500,000. But that’s only going to affect an unfortunate few, as most people put more than the minimum down if they have more than $500,000 to spend. Plus the measures could result in an uncharacteristic January rush on $500K-plus condos, as the affected buyers attempt to close purchases ahead of the new rules.
There’s no sign that demand for Lower Mainland real estate from overseas buyers will cool in 2016 – and, as luxury property in desirable neighbourhoods get snapped up as homes or investments, foreign money will likely further spill over into commercial and recreational real estate. However, this increasing trend is unlikely to redirect money away from residential real estate, which remains the number one choice as many overseas families choose to relocate to the region.
At the other end of the market, the much-anticipated arrival in B.C. of 1,500 Syrian refugees, mostly in family units, may put a bit of additional pressure on an already highly pressurized rental market – and will certainly put pressure on governments to provide affordable housing.
Joannah Connolly
Editor-in-Chief
West Coast Condominium
