Market Trends of Canada Condominiums and Apartments Industry
Increased demand for affordable housing driving the market
Some Greater Vancouver and Fraser Valley communities fared better than others regarding condominium sales. Coquitlam, for example, fell just 12.8% short of 2021's record pace, with just under 1,000 sales in the first eight months of 2022, compared to 1,146 in the same period in 2021. Vancouver West fared well against the changing tide, registering a 12.4% year-over-year decline, with 3,211 sales in 2022 compared to 3,666 sales in 2021. Surrey North in the Fraser Valley also remained relatively strong, with sales falling 11.7% from 2021's record pace. Between January and August, just over 1,100 apartments were sold, a 155-sale decrease from the 1,255 sales recorded in 2021.
Buyers continue to be patient, waiting for the right listing to appear. The tri-city area of Port Moody, Port Coquitlam, and Coquitlam is a popular destination. There are opportunities in markets like New Westminster, where apartments offer good value for money and a more central location. Those looking for affordability and a good lifestyle are drawn to Vancouver East, particularly Commercial, Main, and Mount Pleasant communities, where new trendy restaurants and shops are springing up. The median price in the area is USD 675,000, up 8% from 2021. Sales in Vancouver West are also holding steady, down only 12% year on year, with over 3,200 sales reported between January and August 2022, compared to 3,666 during the same period in 2021.
In recent years, rising interest rates and the affordability factor contributed to the popularity of the condominium lifestyle. Condominiums account for nearly one in every five properties sold in Calgary. With each announcement of a hike in the overnight rate by the Bank of Canada, entry-level buyers re-evaluated and re-adjusted to new market realities. The rapid rise in rental rates also prompted would-be renters to consider home ownership, with the monthly rate for a one-bedroom apartment in Calgary rising to USD 1,597 (+29.8% year on year) and a two-bedroom apartment now sitting at USD 1,891 (+19.7% year on year).
First-time Buyers are Supplementing the Demand for Condominium across the Country
Prices for new condominium apartments in Vancouver increased the most (+4.2%) in Q1 2022, owing to declining inventories and continued demand for this type of dwelling. Condominium apartments, as opposed to single-family homes, remained relatively affordable for first-time home buyers and investors looking to enter a hot rental market. According to Rentals.ca, Vancouver had the highest year-over-year average rent increase (+29.9%) in March. Higher rents attracted investors to this city, reducing the supply of available units and contributing to price pressures for these new condominium apartments.
According to the Canada Mortgage and Housing Corporation, the inventory of under-construction condominium apartments decreased by 4.7% in the first quarter of 2022 compared to the fourth quarter of 2021. It was the third quarter in a row that inventories fell. While supply remained low, demand for housing increased, owing to many in-migrants moving into British Columbia over the past year. In the first and second quarters of 2021, interprovincial net migration reached levels not seen since 1994. Prices for new condominium apartments increased in Toronto (+1.4%) and Victoria (+1.3%). The Building Industry and Land Development Association reported low condominium apartment inventories in Toronto, as well as an increase in sales in January and February 2022.
