Condo market to land softly but certain markets in danger

by Vernon Jones15 Aug 2014
The Conference Board of Canada is joining the chorus of experts forecasting a soft landing for Canada’s condo market, though the optimism doesn’t extend to some of the more popular cities.

“The apartment condominium market enjoys a reason able outlook; after considerable angst about prospects of a general housing market crash, most analysts, including us, now believe the Canadian market is not a bubble about to burst, but will land softly,” their latest report, commissioned by Genworth Canada states. “There are pockets of higher risk, like potentially overbuilt condominium markets in several eastern cities, notably Toronto, and the possibility that slowing offshore demand could derail market recovery in Vancouver.”

In general, the Conference Board believes employment growth in most cities as well as strong immigration will contribute to an ongoing desire and need for condo housing.

One of Canada’s most hotly debated condo markets, however, is expected to see sluggish growth following years of booming activity in the segment.

“Toronto’s condominium market is poised to slow but not collapse,” the report states. “Low mortgage interest rates establish a national backdrop, while local spurs include persistent economic, population, and employment growth, with prospects of more to come.”

Condo starts are expected to tick up slightly in 2014 to 17,648 – up by 198 – before dropping in 2015 to 17,188.
Meanwhile, prices are expected to jump from an average resale price of $308,729 in 2013 to $316,744 in 2014 and, finally, $321,540.

For its part, Vancouver’s condo market is expected to continue to recover if Chinese investor demand continues.

“Vancouver’s apartment condominium market is recovering along with the overall resale market, although slowing offshore demand poses a potential threat,” the report states. “The condominium market appears decoupled from the local economy."

Much like Toronto’s market, resale prices in Vancouver are expected to jump year-over-year.

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