Summer 2013—metropolitan Condo Outlook

Transcription

Insights Into the
Apartment Condominium
Market in Eight
Large Canadian
Metropolitan Areas.
metropolitan condo outlook Summer 2013
Metropolitan Condo Outlook:
Insights Into the Apartment Condominium Market in Eight Large Canadian Metropolitan Areas
by Jane McIntyre and Robin Wiebe
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About Genworth Canada
Genworth Canada, a subsidiary of Genworth MI Canada
Inc. (TSX:MIC), has been the leading Canadian private
residential mortgage insurer since 1995. Known as “The
Homeownership Company,” it provides default mortgage
insurance to Canadian residential mortgage lenders that
enables low-down-payment borrowers to own a home
more affordably and stay in their homes during difficult
financial times. Genworth Canada combines technological
and service excellence with risk management expertise
to deliver innovation to the mortgage marketplace. As of
December 31, 2012, Genworth Canada had $5.7 billion in
total assets and $3.0 billion in shareholders’ equity. Based
in Oakville, Ontario, Genworth Canada employs approximately 260 people across Canada.
Additional information about Genworth Canada is
available at www.genworth.ca.
Preface
This report from The Conference Board of Canada and
Genworth Canada offers an in-depth analysis of the condominium market for eight large Canadian census metropolitan areas (CMAs). The report covers a wide range of
condominium market statistics, such as starts, completions,
absorptions, and prices. The main goal of this publication
is to analyze the recent trends in the condo market in each
of the eight CMAs, as well as where each of the eight
markets is heading over the next five years.
The eight census metropolitan areas covered are Québec
City, Montréal, Ottawa, Toronto, Calgary, Edmonton,
Vancouver, and Victoria.
This report is published twice a year, in summer and winter.
Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Metropolitan Insights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Québec City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Montréal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Ottawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Calgary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Edmonton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Victoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Definitions and Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Standard Geographical Classification (SGC) 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Overview
C
anada’s economy faces mixed prospects.
Emerging recovery in the United States, its
major trading partner, low interest rates, and
a reasonable employment picture are positives. But
slowing growth in China, uncertainty in Europe, easing
prices for metals, and high household debts pose threats.
All in all, we expect Canadian gross domestic product
to advance by 1.8 per cent in 2013, the same pace as in
2012, and 2.5 per cent in 2014. This is forecast to fuel
a 1.5 per cent employment increase both this year and
next, up slightly from 1.2 per cent growth in 2012. The
unemployment rate will accordingly fall from 7.3 per
cent in 2012 to 6.9 per cent in 2014.
Mixed evidence is fuelling robust debate about Canada’s
housing market outlook. We don’t think a countrywide
crash is likely. True, recent data show that resale houses
are historically expensive compared with incomes and
rents. But national statistics frequently mask regional
market variations in a large and diverse country. Also,
recent resale price growth has been unexceptional, and
the ratio of housing starts to population growth is near
past norms. Of course, low interest rates have allowed
households to absorb house price increases while maintaining similar monthly payments. All the while, however,
debt accumulation has continued, reaching alarming levels. But the adjustment to eventually rising mortgage
rates will be gradual. Higher rates could cool the market later this year or in 2014 as pre-authorized interest
rate arrangements expire.
Apartment Condo Indicators
Starts
Resale sales
Resale price ($)*
2012
2013f
2014f
2012
2013f
2014f
2012
2013f
2014f
2,530
28.6
1,711
–32.4
1,204
–29.6
1,725
–3.8
1,643
–4.8
1,773
7.9
220,860
7.4
223,363
1.1
227,575
1.9
11,801
–6.2
8,308
–29.6
7,842
–5.6
12,470
–2.3
11,401
–8.6
12,301
7.9
267,175
4.0
265,344
–0.7
271,899
2.5
Ottawa
2,277
68.2
1,575
–30.8
1,248
–20.8
1,546
–11.2
1,464
–5.3
1,510
3.2
271,331
3.8
272,282
0.4
280,626
3.1
Toronto
27,413
42.8
19,898
–27.4
19,499
–2.0
20,274
–11.5
18,667
–7.9
19,080
2.2
305,350
1.5
305,239
0.0
310,242
1.6
Calgary
3,360
78.2
1,417
–57.8
1,944
37.2
3,967
15.2
3,508
–11.6
3,867
10.2
244,362
3.0
251,237
2.8
259,640
3.3
Edmonton
1,983
42.5
2,409
21.5
2,211
–8.2
2,514
–2.7
2,729
8.6
2,723
–0.2
210,577
–1.2
214,680
1.9
220,743
2.8
Vancouver
9,616
34.0
6,922
–28.0
7,844
13.3
10,681
–17.5
9,795
–8.3
10,289
5.0
366,263
–1.7
364,593
–0.5
369,527
1.4
608
19.4
461
–24.2
547
18.6
1,548
–6.1
1,323
–14.5
1,385
4.7
268,633
–6.5
264,180
–1.7
273,783
3.6
Québec City
Montréal
Victoria
*Average resale prices are used for Québec City and Montréal; median resale prices are used for the rest of the metropolitan areas.
Resale and average prices in Montréal and Québec City include all condominium styles, not just apartments.
f = forecast
Italics indicate percentage change.
Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; Quebec Federation
of Real Estate Boards.
The Conference Board of Canada/Genworth Canada
2 | Metropolitan Condo Outlook—Summer 2013
A flood of foreclosures, and subsequent sharp supply
increases, is simply not in the cards, however. Since
many homebuyers have mortgages at low interest rates,
they are paying down the principle component of their
mortgage much more rapidly. Therefore, while their
debt level may be high, homeowners are reducing it
relatively quickly, something that will help when the
time comes to renew their mortgage.
The condominium market, particularly in Toronto, but
also in Montréal and Vancouver, has been a source of
particular concern. Vancouver’s market is well into a
slowdown. Markets in Toronto and Montréal are cooling,
but we think they will avoid major downturns, partly
because, on the demand side, demographic requirements
remain decent. Also, the banks will continue to require
builders to have healthy pre-sale levels before advancing
construction financing, keeping supply somewhat in check.
While regional markets clearly vary in strength, all will
benefit from an expanding population and a rising share
of condominium-loving empty-nesters aged 55 or more.
During the next five years, Calgary is forecast to have
the fastest average annual population growth, at 2.2 per
cent, while Victoria’s will be only 0.6 per cent. General
population aging will lift increases among people aged
over 55 considerably faster—with annual increases ranging from 2.5 per cent in Victoria to 4.5 per cent in
Calgary. Accordingly, the 55-plus crowd will rise as a
share of the population everywhere. But Calgary will
remain our “youngest” city and Victoria our “oldest.”
Local economic backdrops are largely supportive. GDP
is forecast to expand in all eight of our cities in 2013.
Advances range from 1.3 per cent in Ottawa to 3.6 per
cent in Edmonton. The medium-term outlook is similar.
Between 2014 and 2017, Edmonton and Calgary will
share the fastest average yearly growth, at 3.1 per cent,
while Québec City’s expected 1.8 per cent should be
the slowest. The employment picture is softer; while a
3.2 per cent job increase is forecast in Montréal for
2013, losses are expected in Victoria and Ottawa.
Employment advances will take place in all markets
over the medium term, but no spectacular rise on the
job front is anticipated.
Condominium sales fell sharply in most cities last year.
They were down 17.5 per cent in Vancouver and 11.5 per
cent in Toronto, but rose 15.2 per cent in Calgary. Sales
are expected to fall everywhere but Edmonton in 2013. An
8 per cent decline is expected in Vancouver and Toronto,
but both Victoria and flood-stricken Calgary will see
slightly larger drops.
While active listings rose in all markets last year, Québec
City and Calgary stood out, with increases close to 30 per
cent. Listings were virtually unchanged in Victoria. This
year, led by a 26 per cent drop in Calgary, listings are
expected to pull back in all cities except Québec City
and Montréal. Rising listings last year trimmed the salesto-active-listing ratios in all markets and pushed many
into buyers’ positions. For 2013, we expect mainly buyers’ markets, except for Calgary and Edmonton, which
should be balanced. This will keep house price inflation
relatively tame. Price changes roughly between –2 and
2 per cent are expected everywhere but Calgary, where
we see a 2.8 per cent increase.
The new construction market is expected be mixed.
Absorptions rose relatively strongly in all cities except
Toronto and Ottawa last year. For 2013, absorptions are
forecast to pull back in Québec City, Montréal, and
Victoria. Toronto is expected to see a large gain, although
its stock of unsold units is forecast to rise 71 per cent this
year. Inventories are predicted to ease slightly in Calgary
and Edmonton. Such unsettled new market conditions
will unnerve developers. Apartment condominium starts
are forecast to drop by at least 24 per cent in all cities
but Edmonton this year, although Calgary’s 58 per cent
drop should be accompanied by a flood-drenched asterisk. Most other cities’ declines will be nearer 30 per cent.
Weak pricing will help affordability. Principle and interest
charges are predicted to drop in five of eight cities during
2013, led by a 2.5 per cent decline in Victoria, but rise
slightly in the Alberta cities. Despite these increases,
Calgary and Edmonton are forecast to remain our report’s
most affordable areas measured against local incomes,
since mortgage payments will consume only about 9 per
cent of household income. By contrast, we expect payments to eat up roughly 20 per cent of Vancouver incomes.
Summer 2013—Metropolitan Condo Outlook | 3
Québec City
Share of Population by Age Cohort
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
Sources: The Conference Board of Canada; Statistics Canada.
A
lthough demand in Québec City’s resale apartment condominium market has started to pick up
this year, a weak end to 2012 will result in unit
sales falling by 4.8 per cent for 2013 as a whole, before
growing a forecast 7.9 per cent in 2014. Meanwhile, builders in the new apartment condominium market are expected
to lower starts in both 2013 and 2014, down by more than
50 per cent in total, as they try to reduce inventories.
Demand in Québec City’s resale apartment condominium market has been weakening for several years now,
with unit sales declining in four of the past five years.
The declines have been modest, however, and follow a
period of significant growth from 2004 to 2007, which
saw sales of apartment condominiums reach a record
1,820 units—triple their average of the previous decade.
As a result, in level terms, sales were still historically
high last year, at 1,725 units. Much of the sales growth
prior to the 2008–09 recession resulted from strong population increases, especially in the over 55 age group, a
prime condominium-buying segment of the population.
Since 2008, buyers have been deterred by a slower
economy, tax hikes, tighter mortgage rules, and higher
prices. Indeed, with the market in sellers’ territory for
much of the past decade (listings did not initially keep
pace with unit sales), average condominium prices grew
by an average of 9.5 per cent per year during this time,
registering strong increases as demand clearly surpassed
Apartment Condo Construction
(starts, units; share, per cent)
Apartment condo starts (left)
Condo starts as a share of multiple starts (right)
3,000
2,500
2,000
1,500
1,000
500
0
60
50
40
30
20
10
0
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Sources: The Conference Board of Canada; CMHC Housing Time
Series Database.
supply. On the flipside, the growth in prices has persuaded more sellers to enter the apartment condominium
market over the last three years. Active listings rose by
an annual average of 25.6 per cent from 2010 to 2012,
lowering the sales-to-active-listings ratio to 9.4 per cent
last year, bringing the market back in balanced territory.
With the apartment condominium market now balanced,
prices have finally begun to weaken. Average prices fell
in the first quarter of 2013, and are expected to rise just
1.1 per cent for the year overall, with growth forecast to
Sales to Active Listings and Price Change
Affordability and Condo Sales
(share, per cent; sales, units)
(per cent)
20
Share of household income spent on mortgage (left)
Existing apartment condo sales (right)
2,500
16
2,000
12
1,500
8
1,000
4
500
1999 01 03
05
07
09
Sales-to-active-listings ratio (left)
Average price growth (right)
30
25
20
15
10
5
0
11 13f 15f 17f
20
15
10
5
0
−5
−10
1998 00
02 04 06 08 10 12 14f 16f
f = forecast
Sources: The Conference Board of Canada; Quebec Federation
f = forecast
Ratio of Condominium Starts to Population Growth
Employment Growth
(starts per one person increase in population)
Current year
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0
1998 00
02
04
06
20−year average
08
10
12
14f 16f
f = forecast
Series Database.
reach a modest 1.9 per cent next year. In turn, buyers
are returning to the market. Unit sales of apartment
condominiums began the year on an upward trend, and
an improving economy (real GDP is forecast to expand
by 1.7 per cent this year and 2.2 per cent in 2014, after
a soft 0.9 per cent increase last year) will provide an
additional boost to demand moving forward. But given
the declines in the last half of 2012, unit sales are still
expected to fall by 4.8 per cent in 2013, before growing
7.9 per cent next year. The pickup in sales will continue
in 2015, when sales are forecast to rise by a further 5.2
per cent. Starting in 2016, we expect a more stable market, and by 2017, growth in unit sales should moderate
(per cent)
7
6
5
4
3
2
1
0
−1
−2
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
to 1.8 per cent. Listings are expected to decline, however,
as the anticipated weaker price growth for this year and
next should keep buyers away over the medium term.
Accordingly, the sales-to-active-listing ratio will climb
back up to 14 per cent by 2017, resulting in an acceleration in price growth to 5.3 per cent.
Québec City’s new apartment condominium market has
been quite active in recent years. Builders increased
starts by an average of 12.5 per cent annually from 2008
to 2012, to a record 2,530 units last year, encouraged
by stronger population growth in the region. However,
even though demand was also increasing—absorptions
Resale Condominium Apartment Market
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
1,800
–0.8
1,794
–0.3
1,725
–3.8
1,643
–4.8
1,773
7.9
1,865
5.2
1,910
2.4
1,943
1.8
Active listings
822
3.2
1,197
45.7
1,532
28.0
1,777
16.0
1,576
–11.3
1,400
–11.2
1,268
–9.4
1,161
–8.4
Months’ supply
5.5
8.0
10.7
13.0
10.7
9.0
8.0
7.2
198,203
9.6
205,631
3.7
220,860
7.4
223,363
1.1
227,575
1.9
235,058
3.3
245,921
4.6
258,995
5.3
Unit sales
Average price ($)
f = forecast
Sources: The Conference Board of Canada; Quebec Federation of Real Estate Boards; CMHC Housing Time Series Database.
New Condominium Apartment Market
Starts
Under construction
Completions
Complete and not absorbed
Absorptions
Months’ supply
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
1,675
29.0
1,967
17.4
2,530
28.6
1,711
–32.4
1,204
–29.6
1,237
2.7
1,258
1.7
1,276
1.4
919
36.3
1,452
58.0
1,664
14.5
1,669
0.3
1,462
–12.4
1,397
–4.4
1,357
–2.9
1,331
–1.9
1,294
7.6
1,510
16.7
2,620
73.5
1,617
–38.3
1,329
–17.8
1,286
–3.2
1,293
0.5
1,299
0.4
255
4.7
335
31.1
640
91.3
715
11.6
405
–43.3
229
–43.3
171
–25.3
174
1.6
1,298
14.6
1,422
9.6
2,048
44.0
1,957
–4.4
1,587
–18.9
1,414
–10.9
1,323
–6.5
1,284
–3.0
2.4
2.8
3.8
4.4
3.1
1.9
1.6
1.6
f = forecast
grew by 12.6 per cent per year on average—it was not
enough to keep up with the rising supply. As a result,
inventories also rose steadily, reaching their highest
level in 16 years in 2012.
Builders reduced starts in the fourth quarter of last year,
but then increased them once again in the first quarter
of 2013, as new developments continued to get under
way. At the same time, demand has started to slow, with
absorptions falling in two of the past three quarters. As
a result, builders are expected to pull back from the
market again through the rest of 2013 to keep inventories under control. Starts are forecast to fall by a total of
32.4 per cent this year and by 29.6 per cent in 2014,
down to 1,200 units. From 2015 to 2017, even with
small forecast declines in absorptions, lower inventories
will allow builders to keep starts at around 1,250 units,
closer to their long-term average.
Montréal
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
U
nit sales of apartment condominiums in Montréal
are forecast to decline by 8.6 per cent in 2013,
pulled down by weakness in the second half of
2012 and through the first quarter of this year. Next year,
a stronger economy will help to boost sales once more.
However, builders in the new apartment condominium
market are expected to lower starts both this year and
next, down by more than 35 per cent overall, as they
continue to try to reduce inventories.
Except for a slight pause in 2008, demand in Montréal’s
resale condominium market rose steadily from the mid1990s until last year. Unit sales of apartment condominiums were being driven by factors such as a growing share
of the population 55 and older, increased foreign investment, and a growing appetite for living downtown. In
recent years, low interest rates have also boosted demand,
as have relatively cheaper condominium prices. Indeed,
despite strong growth in recent years, average condominium prices in 2012 remained 16 per cent lower than
those for the overall resale market. Still, in level terms,
average prices reached $267,200 last year, double their
level just 10 years ago. Thanks to these higher prices,
active listings also rose alongside demand, keeping the
market balanced and the sales-to-active-listings ratio
fairly steady since 2005, at around 12 per cent.
15,000
80
12,000
70
9,000
60
6,000
50
3,000
40
0
30
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
Higher personal taxes, a weaker economy, and tougher
mortgage rules finally led buyers to shy away from
Montréal’s resale apartment condominium market
last year. Unit sales of apartment condominiums fell
in three of the four quarters in 2012, slipping 2.3 per
cent for the year as a whole. Prices increased once again
last year, however, up 4 per cent. In turn, sellers continued to flock to the market. Active listings increased
18.8 per cent in 2012, reducing the sales-to-active-listings
ratio to 11 per cent, its lowest level since 1999. Sales
declined through the first quarter of 2013 as well, down
(per cent)
20
14,000
18
12,000
16
10,000
14
8,000
12
6,000
4,000
10
1999 01 03
05
07
09
Average price growth (right)
35
30
25
20
15
10
5
1998 00
11 13f 15f 17f
25
20
15
10
5
0
−5
02 04 06 08 10 12 14f 16f
f = forecast
f = forecast
Employment Growth
Current year
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0
20−year average
(per cent)
4
3
2
1
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
3.5 per cent at annual rates. But a strengthening economy and sound job growth (employment is expected to
rise by 3.2 per cent this year) will lead buyers to slowly
return to the market later this year. As a result, after
contracting by 8.6 per cent in 2013, unit sales are
expected to increase by 7.9 per cent next year.
Slower demand in 2013 has finally stalled price
growth—average condominium prices are expected to
decline 0.7 per cent this year, the first drop in prices in
17 years. However, sellers are still entering the market
at a brisk pace. Accordingly, the sales-to-active-listings
ratio is forecast to slip to an average of 8.9 per cent for
−1
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
2013 and 2014. From 2015 to 2017, it is anticipated
that steady economic growth and the aging population
will keep unit sales moving upward, albeit by a more
modest average of 1.4 per cent per year. However,
growth in active listings is expected to moderate following the strength of the past couple of years. This will
lead to a steady rise in the sales-to-active-listings ratio,
up to 10.5 per cent by 2017. Average condominium
prices are therefore forecast to grow at a faster pace as
well, growing by 2.5 per cent in 2014 and accelerating
to an average of 3.3 per cent annually over 2015–17.
Unit sales
Active listings
Months’ supply
Average price ($)
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
12,652
6.7
12,758
0.8
12,470
–2.3
11,401
–8.6
12,301
7.9
12,550
2.0
12,690
1.1
12,806
0.9
6,831
–5.4
8,301
21.5
9,865
18.8
10,801
9.5
11,299
4.6
11,456
1.4
10,773
–6.0
10,147
–5.8
6.5
7.8
9.5
11.4
11.0
11.0
10.2
9.5
247,734
9.7
256,815
3.7
267,175
4.0
265,344
–0.7
271,899
2.5
280,866
3.3
291,489
3.8
299,876
2.9
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
10,293
38.1
12,582
22.2
11,801
–6.2
8,308
–29.6
7,842
–5.6
8,196
4.5
8,427
2.8
8,489
0.7
Under construction
7,803
34.5
10,583
35.6
13,012
22.9
12,731
–2.2
12,743
0.1
12,659
–0.7
12,716
0.4
12,738
0.2
Completions
7,197
–1.2
9,425
31.0
10,361
9.9
9,105
–12.1
7,977
–12.4
8,174
2.5
8,368
2.4
8,497
1.5
1,233
–22.1
1,374
11.4
1,663
21.1
1,686
1.3
1,418
–15.9
1,467
3.5
1,540
5.0
1,607
4.3
Absorptions
7,745
7.3
8,885
14.7
10,274
15.6
9,218
–10.3
8,099
–12.1
8,118
0.2
8,294
2.2
8,438
1.7
1.9
1.9
1.9
2.2
2.1
2.2
2.2
2.3
Starts
Months’ supply
f = forecast
Similar to the resale market, Montréal’s new apartment
condominium market was also active for a number of
years before slowing in 2012. Starts of apartment condominiums rose by an average of 30.2 per cent per year
in 2010–11 alone, reaching a record 12,600 units. But
despite significant increases in absorptions as well, supply
surpassed demand—in fact, supply was well above demographic requirements. As a result, inventories climbed
more than 30 per cent over 2011 and 2012, prompting
builders to pull back from the market last year, lowering
starts of apartment condominiums by 6.2 per cent.
Starts of apartment condominiums slipped a further
11.1 per cent (at annual rates) in the first quarter of
2013, and are expected to continue to fall over the rest
of this year and into the first half of 2014. In all, starts
are forecast to decline 29.6 per cent in 2013 and 5.6 per
cent in 2014, down to 7,800 units. Over the following
few years, with inventories under control, builders will
raise starts once more, although growth will be moderate, at an average of 2.7 per cent per year from 2015
to 2017.
Ottawa
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
D
emand in Ottawa’s resale and new apartment
condominium markets will continue to be hampered by the slow economy in 2013. Unit sales
of apartment condominiums are expected to fall by 5.3 per
cent this year, down for the third year in a row. In the new
home market, builders are forecast to reduce starts by more
than 30 per cent in 2013, giving the market time to absorb
high levels of completed and unoccupied units.
Unit sales in Ottawa’s resale apartment condominium
market rose by an annual average of 14.6 per cent through
2009 and 2010, as buyers enjoyed a strong economy and
low interest rates following the global recession. Stronger
population growth also helped to boost demand. Increased
demand led to median apartment prices jumping more
than 23 per cent over 2009–10. Encouraged by stronger
demand and higher prices, sellers then increased active
listings by 54.3 per cent in 2010. As a result, the salesto-active-listings ratio slipped below 30 per cent.
Over the past two years, demand in Ottawa’s resale
apartment condominium market has cooled as a result
of slower population growth, as well as fiscal restraint
and public sector layoffs. Indeed, real GDP increased
just 1.5 per cent in 2011 and 1.3 per cent in 2012. The
market was also being hit by tighter mortgage rules and
the higher prices. Accordingly, after reaching a record
2,500
2,000
1,500
1,000
500
0
36
30
24
18
12
6
0
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
1,835 units in 2010, unit sales fell to 1,550 units last
year. Meanwhile, for financial reasons, layoffs brought
additional sellers to the market. Higher prices did the
same but for different reasons, as homeowners tried to
capitalize on the increased value of their condominiums.
Such behaviour led to increases in listings averaging
25.5 per cent annually in 2011 and 2012. In turn, the
sales-to-active-listings ratio dropped further, down to
14.6 per cent by 2012, thereby slowing price growth to
a more modest average of 2.6 per cent per year.
(per cent)
20
2,500
16
2,000
12
1,500
8
1,000
500
4
1999 01 03
05
07
09
Median price growth (right)
60
20
40
10
20
0
0
11 13f 15f 17f
−10
2002 04
06
08
10
12
14f
16f
f = forecast
Sources: The Conference Board of Canada; Canadian Real
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
(per cent)
20−year average
0.15
0.10
0.05
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
With the regional economy still feeling the effects of
government spending cuts (real GDP is forecast to grow
just 1.3 per cent again in 2013), demand in the resale
apartment condominium market is expected to weaken
again this year. Unit sales declined in the first quarter of
2013 and are anticipated to contract 5.3 per cent for the
year overall. Slowing price growth has given sellers reason to pause now as well—active listings also fell in the
first quarter and are expected to keep falling through the
rest of 2013, down a total of 8 per cent. Still, the salesto-active-listings ratio will increase only slightly this year,
to 15 per cent, holding growth in the median price to
just 0.4 per cent. As economic growth strengthens in
2014, demand will start to rise once more, pushing unit
6
5
4
3
2
1
0
−1
−2
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
sales up by 3.2 per cent next year and then by an average
of 2.5 per cent per year from 2015 to 2017. Meanwhile,
listings will drop more in line with their long-term average, and so the sales-to-active-listings ratio will rise
from 2014 onward, boosting price growth to 3.1 per
cent next year and an average of 4.6 per cent per year
over 2015–17.
Ottawa’s new apartment condominium market has been
on more of a roller-coaster ride over the past few years.
Following a significant increase in 2010, builders reduced
starts of apartment condominiums by 10.3 per cent in
2011, as the weakness in the economy led to lower
absorptions and higher inventories. Despite even
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
1,835
18.5
1,741
–5.1
1,546
–11.2
1,464
–5.3
1,510
3.2
1,555
3.0
1,593
2.4
1,624
2.0
Active listings
560
54.3
700
25.0
881
25.8
811
–8.0
542
–33.1
448
–17.4
441
–1.4
444
0.6
Months’ supply
3.7
4.8
6.8
6.6
4.3
3.5
3.3
3.3
257,777
16.8
261,442
1.4
271,331
3.8
272,282
0.4
280,626
3.1
293,210
4.5
308,036
5.1
320,888
4.2
Unit sales
Median price ($)
f = forecast
Sources: The Conference Board of Canada; Canadian Real Estate Association; CMHC Housing Time Series Database.
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
1,509
62.8
1,354
–10.3
2,277
68.2
1,575
–30.8
1,248
–20.8
1,267
1.5
1,350
6.5
1,400
3.7
Under construction
1,830
–2.4
1,901
3.9
2,663
40.1
2,915
9.5
2,657
–8.8
2,469
–7.1
2,327
–5.8
2,255
–3.1
Completions
1,443
52.7
1,363
–5.5
1,458
7.0
1,405
–3.6
1,461
4.0
1,449
–0.8
1,462
0.9
1,451
–0.8
129
–12.7
157
21.9
165
4.6
253
54.0
288
13.6
305
6.0
345
12.9
367
6.5
Absorptions
1,463
53.5
1,370
–6.4
1,338
–2.3
1,371
2.5
1,429
4.2
1,430
0.0
1,424
–0.4
1,436
0.8
1.1
1.4
1.5
2.2
2.4
2.6
2.9
3.1
Months’ supply
f = forecast
weaker economic growth last year however, builders
came back to the market with a number of new condominium developments. Starts rose a whopping 68.2 per
cent in 2012, reaching a record 2,277 units. But, with
no matching growth in absorptions, inventories continued to rise as well.
Absorptions are expected to rise only modestly in 2013,
as demand continues to be held back in part by public
sector job cuts. As a result, although there are still several
projects ongoing, builders are expected to pull back from
the market over the rest of this year and into 2014, to
get inventories under control. Starts of apartment condominiums are forecast to fall 30.8 per cent in 2013 and
another 20.8 per cent next year, bringing them down
to 1,250 units for 2014. Builders are then expected to
increase starts of apartment condominiums by an average of 3.9 per cent per year over 2015–17, supported by
improving population growth.
Toronto
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
U
nit sales in Toronto’s resale apartment condominium market are forecast to fall 7.9 per cent this
year. However, much of this weakness stems
from significant declines in the second half of 2012, as
stronger GDP growth is expected to lead to higher demand
throughout 2013. Builders in the new market are anticipated
to reduce starts this year by 27.4 per cent, following record
levels in 2012.
Demand in the Toronto resale apartment condominium
market increased from 2009 to 2011, boosted by a growing economy, strong population gains, and lower interest
rates. Unit sales rose by an annual average of 8.1 per
cent, reaching a record 22,900 units in 2011. Higher
demand translated into stronger price growth as well—
median apartment condominium prices increased an
average of 7.8 per cent per year to top $300,000 for the
first time. Sellers, encouraged by the higher prices, also
flocked to the market. Active listings grew nearly 24 per
cent, in total, over 2010 and 2011, lowering the salesto-active-listings ratio from 45.2 per cent to an average
of 36.3 per cent.
More modest economic growth and tighter mortgage
rules served to reduce demand in the resale apartment
condominium market last year. Sales slipped 11.5 per
cent, although they were still healthy in level terms by
historical standards, at just over 20,000 units. Active
30,000
25,000
20,000
15,000
10,000
5,000
0
75
65
55
45
35
25
15
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
listings continued to soar, increasing a further 18.9 per
cent. As a result, the sales-to-active-listings ratio fell to
27.5 per cent—its lowest level in eight years. In turn, price
growth slowed to just 1.5 per cent. Demand picked up
again in the first quarter of this year, and is expected to
remain positive for the rest of 2013 as well, in line with
an improved economy. However, given the significant
declines in unit sales through the last half of 2012, their
lower starting point at the beginning of this year will
still leave them down a forecast 7.9 per cent on average
for 2013 relative to the average 2012 level. Overall,
(per cent)
18
25,000
16
22,000
14
19,000
12
16,000
10
8
45
12
40
9
35
6
13,000
30
3
10,000
25
1999 01 03 05 07 09 11 13f 15f 17f
0
1998 00
02 04 06 08 10 12 14f 16f
f = forecast
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
20−year average
0.30
(per cent)
5
4
0.25
3
0.20
2
0.15
0.10
1
0
0.05
−1
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
sales will slip to 18,700 units for 2013, the first time
sales will come in below 20,000 units since 2008. Sellers
are also expected to lower active listings by more than
10 per cent. While this will lead to a small increase in
the sales-to-active-listings ratio, to 28.6 per cent, the
market will remain balanced, holding price growth in
check. Indeed, after posting a decline in the second half
of 2012, median apartment prices are forecast to be flat
this year.
As growth in Toronto’s economy strengthens again next
year, demand in the resale apartment condominium market is expected to rise as well. Sales will advance 2.2 per
cent in 2014 and then average growth of 2.5 per cent
−2
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
per year from 2015 to 2017. Similar increases in active
listings will keep the market balanced in the coming
years—the sales-to-active-listings ratio is forecast to
stay between 29 and 30 per cent. Accordingly, growth
in median apartment prices is anticipated to be modest
from 2014 to 2017, at an annual average of 1.8 per cent.
Toronto’s new apartment condominium market has
enjoyed rapid growth over the past three years. Builders
increased starts more than 70 per cent during 2010 and
2011, and by a further 42.8 per cent last year, to reach a
record 27,400 units in 2012. Much of the recent growth
came from large high-rise developments across the region
and in the downtown core, including the Trump Tower,
Unit sales
Active listings
Months’ supply
Median price ($)
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
21,687
2.3
22,904
5.6
20,274
–11.5
18,667
–7.9
19,080
2.2
19,622
2.8
20,142
2.6
20,526
1.9
5,093
22.2
5,159
1.3
6,133
18.9
5,445
–11.2
5,334
–2.0
5,595
4.9
5,812
3.9
5,672
–2.4
2.8
2.7
3.6
3.5
3.4
3.4
3.5
3.3
280,375
10.2
300,946
7.3
305,350
1.5
305,239
0.0
310,242
1.6
315,863
1.8
322,034
2.0
328,130
1.9
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
11,586
5.8
19,195
65.7
27,413
42.8
19,898
–27.4
19,499
–2.0
19,802
1.6
20,000
1.0
20,499
2.5
Under construction
32,897
–6.5
32,685
–0.6
44,213
35.3
49,579
12.1
44,105
–11.0
42,977
–2.6
43,054
0.2
43,068
0.0
Completions
14,948
22.4
17,878
19.6
12,389
–30.7
23,240
87.6
23,177
–0.3
19,910
–14.1
19,977
0.3
20,494
2.6
756
171.8
724
–4.2
829
14.4
1,416
71.0
1,527
7.8
1,139
–25.4
930
–18.4
880
–5.4
14,449
18.4
17,791
23.1
12,335
–30.7
22,505
82.4
23,491
4.4
20,259
–13.8
20,014
–1.2
20,632
3.1
0.6
0.5
0.8
0.8
0.8
0.7
0.6
0.5
Absorptions
Months’ supply
f = forecast
the Shangri-La Toronto, the Four Seasons Hotel and
Residences, and 300 Front Street West, to name a few.
Initially, demand rose as well—absorptions increased
through 2010–11, boosted by spillover demand from
the resale market, higher levels of foreign investment,
and solid population growth. But by last year, a more
modest economy and tighter mortgage rules were making
consumers more cautious. Absorptions dropped 30.7 per
cent in 2012, driving up inventories to record levels.
With several projects nearing completion, starts of
apartment condominiums fell in the first quarter of
this year. Still, at their current level, they are well above
their long-term average, as is the ratio of starts to population growth. Builders are therefore expected to pull
back from the market this year and next, lowering starts
nearly 30 per cent in total. Lower inventories, a stable
economy, and further population gains should entice
buyers and builders back to the new apartment condominium market by 2015. Starts are forecast to increase
by a modest annual average of 1.5 per cent from 2015
to 2017.
Calgary
(per cent)
15–24
25–39
40–54
55–74
75+
35
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
T
he housing market impact of the Calgary floods
should mainly be felt in the third quarter of 2013.
Since this report focuses on apartment condominiums, most of which are well above ground, the damage to
their resale prospects should be relatively minor. But some
condominium construction sites could be flooded, hampering
starts. A decent medium-term market outlook is underpinned
by solid local employment and population growth.
Condominium sales had been doing well before the
flood, averaging over 3,900 units at an annual rate in
the fourth quarter of 2012 and the first quarter of 2013.
Transactions ended 2012 near 3,970 units, up 15 per
cent from 2011 and on par with the average of the previous decade, which included the boom years. Sales
will drop sharply in the third quarter of 2013, leading to
a 12 per cent decrease for 2013 on the whole. Despite
rising interest rates, the lift from a decent local economy will boost sales 10 per cent in 2014. Thereafter,
we expect sales to rise gently, to just under 4,100 units
in 2017.
Active apartment listings had tapered off, hovering below
1,000 units in the fourth quarter of last year and the first
quarter of 2013. Still, for 2012 as a whole, active listings
averaged 1,263 units, up 30 per cent from 2011. The
flood has presumably damaged at least some actual or
potential apartment listings. This will cut active listings
6,000
5,000
4,000
3,000
2,000
1,000
0
80
70
60
50
40
30
20
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
in the third quarter by 10 per cent and lead to a 26 per
cent decline in listings for all of 2013. The lower listings last autumn lifted the sales-to-active-listings ratio
slightly above 35 per cent, its highest level since 2009
and likely approaching sellers’ market conditions. The
ratio is forecast to stabilize near 34 per cent in the third
quarter of 2013 and end the year at 31 per cent. A solidly balanced market featuring a sales-to-active-listings
ratio between 33 and 35 per cent is our call for between
2014 and 2017.
(per cent)
13
6,000
11
4,000
9
2,000
7
0
1999 01 03
05
07
09
11 13f 15f 17f
130
110
90
70
50
30
10
50
40
30
20
10
0
−10
1998 00
02 04 06 08 10 12 14f 16f
f = forecast
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
0.20
20−year average
(per cent)
10
8
0.16
6
0.12
4
0.08
2
0.04
0
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
The higher sales-to-active-listings ratio last fall and winter gave sellers a bit more pricing power. Price growth
accordingly soared to 10 per cent on a year-over-year
basis in the fourth quarter, the strongest burst since 2007.
But weakness earlier in 2012 limited the full-year price
gain to 3 per cent. Values in the first quarter were up 5 per
cent from a year earlier and were on pace to rise similarly in the second—before the flood hit. The near-term
trajectory of prices will be determined by flood recovery. Over the following few years, we expect prices
to rise at a moderate pace of between 2 and 3.5 per
cent annually.
−2
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Calgary’s condominium market remains affordable.
Monthly principle and interest charges on the medianpriced apartment condominium in 2012 were above only
those in Québec City and Edmonton among the eight
cities covered in this report. This, combined with high
local incomes, means the average mortgage payment
should consume only 9.1 per cent of local income in 2013,
tied with Edmonton for the lowest among our cities.
The flood will hit condominium starts harder, since at
least some of these would involve excavating flooded
sites. Construction was already headed for a pullback
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Unit sales
3,262
–17.6
3,444
5.6
3,967
15.2
3,508
–11.6
3,867
10.2
3,966
2.6
4,010
1.1
4,075
1.6
Active listings
1,286
8.4
969
–24.7
1,263
30.4
936
–25.9
927
–0.9
954
3.0
1,014
6.3
1,002
–1.3
4.7
3.4
3.8
3.2
2.9
2.9
3.0
3.0
242,925
0.6
237,354
–2.3
244,362
3.0
251,237
2.8
259,640
3.3
268,768
3.5
276,263
2.8
282,097
2.1
Months’ supply
Median price ($)
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
1,063
177.5
1,886
77.4
3,360
78.2
1,417
–57.8
1,944
37.2
2,052
5.6
2,121
3.4
2,222
4.7
Under construction
3,387
–36.8
3,170
–6.4
4,344
37.0
4,167
–4.1
3,697
–11.3
3,408
–7.8
3,132
–8.1
2,877
–8.2
Completions
2,768
27.9
681
–75.4
1,648
142.0
1,868
13.4
2,351
25.8
2,315
–1.6
2,394
3.4
2,469
3.1
579
110.8
468
–19.2
297
–36.4
286
–3.9
261
–8.6
197
–24.5
163
–17.5
150
–7.4
Absorptions
2,531
34.0
980
–61.3
1,671
70.5
1,862
11.4
2,382
27.9
2,379
–0.1
2,419
1.7
2,489
2.9
2.7
5.7
2.1
1.8
1.3
1.0
0.8
0.7
Months’ supply
f = forecast
because of relatively high inventories of unsold units,
tepid new-unit take-up, and a surge in starts during
2012. Now we assume that most of the drop-off in
starts will occur in the third quarter, with lingering
weakness into the autumn. This will result in a total
of just over 1,400 starts in 2013.
Over the next few years, the new construction outlook
is well supported demographically. We expect population
growth near or above 2 per cent annually during each
year of our forecast, with the number of condominiumloving empty-nesters aged 55 or more rising roughly
twice as fast. Starts will then increase steadily, to reach
over 2,200 by 2017.
Edmonton
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
T
he apartment condominium market continues to
strengthen as employment growth and low interest
rates support housing demand, reducing supply
backlogs among both new and existing units. Resale prices
are forecast to inch higher for the first time in six years in
2013, while a second big annual gain will lift starts above
2,400 units this year, their best showing since 2008.
Ongoing population and employment gains suggest
healthy condominium demand in the medium term.
Edmonton’s condominium market, lethargic for several
years, is expected to improve in 2013. A backlog of
active listings, which helped keep pricing soft, is being
depleted, and the market should be balanced this year.
We expect the median price to rise modestly in 2013,
its first gain since 2007.
Existing condominium sales were stronger in the third
and fourth quarters of 2012, but the full-year total still
showed a decline relative to 2011, the second year of
drop in the past three. In fact, alternating advances and
declines since 2008 have left volumes largely trendless.
But annualized sales in the first quarter of 2013 were
the highest recorded since 2009, setting the stage for a
decent spring market and a 9 per cent hike in full-year
transactions. We forecast little change in volumes for
2014, then modest growth, but not to boom-era levels.
4,000
60
3,000
50
2,000
40
1,000
30
20
0
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
Rising sales helped pare seasonally adjusted active listings below 1,200 units, the fewest since 2007, in the
fourth quarter of 2012. We expect further declines in
listings, to roughly 1,000 units this year and to 945
units in 2014, but general stability thereafter. Falling
listings lifted the sales-to-active-listings ratio to nearly
20 per cent in the first quarter, the highest in five years.
This ratio should rise throughout 2013, ushering in a
balanced market by the second half of the year. Balanced
conditions are also forecast through the medium term,
with a ratio between 23 and 26 per cent.
(per cent)
15
5,000
13
4,000
11
3,000
9
2,000
7
1,000
5
0
1999 01 03
05
07
09
120
100
80
60
40
20
0
1998 00
11 13f 15f 17f
50
40
30
20
10
0
−10
02 04 06 08 10 12 14f 16f
f = forecast
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
20−year average
0.20
0.15
0.10
0.05
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
The tightening market should prompt a 1.9 per cent gain
in the median condominium apartment price in 2013,
following five annual decreases including a 1.2 per cent
easing in 2012. While these dips were typically small,
they cut the median price a cumulative 9 per cent. The
median price is forecast to stay below its 2007 peak
until 2016.
Affordability is good in this area. In 2012, monthly
mortgage carrying costs on the median-priced Edmonton
condominium were the lowest among the eight cities
covered in this report in absolute terms and trailed only
(per cent)
7
6
5
4
3
2
1
0
−1
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Calgary (very slightly) relative to local incomes.
Edmonton’s charges as a share of disposable income
were 23 percentage points below their peak in 2007,
a result attributable to a combination of easing local
prices and increasing household income. We expect
absolute carrying costs to rise 1.1 per cent in 2013,
again slightly below the anticipated pace of increase
in the area’s average household income.
The 20 per cent drop in inventories of unsold new
condominium apartment units in 2012 was a welcome
development for builders who saw these stocks soar
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Unit sales
2,474
–15.6
2,584
4.4
2,514
–2.7
2,729
8.6
2,723
–0.2
2,787
2.4
2,845
2.1
2,870
0.9
Active listings
1,421
7.0
1,230
–13.4
1,248
1.5
1,013
–18.8
945
–6.7
919
–2.7
933
1.4
951
1.9
6.9
5.7
6.0
4.5
4.2
4.0
3.9
4.0
217,438
–0.3
213,220
–1.9
210,577
–1.2
214,680
1.9
220,743
2.8
226,813
2.7
233,527
3.0
240,455
3.0
Months’ supply
Median price ($)
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
1,463
223.0
1,392
–4.9
1,983
42.5
2,409
21.5
2,211
–8.2
2,231
0.9
2,259
1.3
2,287
1.2
Under construction
2,599
–34.8
2,955
13.7
2,964
0.3
3,641
22.9
3,211
–11.8
3,157
–1.7
3,090
–2.1
3,025
–2.1
Completions
1,321
–66.9
1,307
–1.1
1,475
12.9
2,520
70.9
2,426
–3.7
2,278
–6.1
2,339
2.6
2,344
0.2
645
22.8
664
3.0
529
–20.4
515
–2.6
643
24.9
583
–9.3
539
–7.5
536
–0.6
1,447
–57.2
1,339
–7.5
1,595
19.1
2,396
50.2
2,428
1.3
2,312
–4.8
2,377
2.8
2,331
–1.9
5.3
6.0
4.0
2.6
3.2
3.0
2.7
2.8
Absorptions
Months’ supply
f = forecast
during the 2009 downturn and remain stubbornly high.
The decline was fuelled by a 19 per cent increase in
absorptions of new units during 2012 and by significantly fewer completions between 2010 and 2012
than during the six previous years.
The new construction market should continue to
improve, as an expected big increase in absorptions
trims inventories a further 3 per cent in 2013. This
will fuel a jump in apartment condominium starts to
2,400 units, the most since 2008. Over the following
few years, population growth near 2 per cent annually
and double that among those aged 55 or more will provide solid demographic support. Moreover, the ratio of
condominium starts to population growth has trailed its
two-decade average for five straight years. Starts are thus
forecast to hover at a historically decent (but not booming) level of 2,200–2,300 units through our forecast.
Vancouver
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
V
ancouver’s existing condominium market faces
buyers’ conditions, undercut by the area’s general
housing market weakness. A decent local economy should ultimately fuel broadly rising residential
demand, and condominiums provide an affordable housing
option. Accordingly, we expect sales and prices for existing
units to increase in the medium term, after another dip this
year. The new condominium market continues to recover
fitfully from the 2009 meltdown, but remains burdened by
high inventories.
Vancouver’s market for existing apartment condominiums remains soft, but is flashing encouraging signs, as
the overall resale market appears to have bottomed out.
Although the condominium market will struggle to exit
its buyers’ state in the near term, medium-term condominium demand will be bolstered by their relative affordability in an expensive city. The area is expected to enjoy
decent economic growth, persistent employment gains,
and solid population advances, all of which sustain
housing demand.
This year still looks unsettled, however. Sales in the
first quarter of 2013 were up slightly from the fourth
quarter of 2012, but remain weak. This sets the tone for
a fourth straight annual decline in volumes, although
15,000
80
12,000
70
9,000
60
6,000
50
3,000
40
0
30
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
the expected 2013 drop of 8 per cent will be less than
half the 17 per cent decline recorded in 2012. Sales are
forecast to rise 5 per cent in 2014 and modestly each
year thereafter. Still, they will stay well below the average of the past decade, even by the end of our forecast.
Discouragement among potential condominium sellers
has been reflected by four straight quarterly drops in the
number of active condominium listings, which will
26
24
22
20
18
16
14
12
(per cent)
19,000
17,000
15,000
13,000
11,000
9,000
7,000
5,000
1999 01 03 05 07 09 11 13f 15f 17f
50
20
40
15
30
10
20
5
10
0
0
−5
1998 00
02 04 06 08 10 12 14f 16f
f = forecast
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
20−year average
0.5
(per cent)
4
3
0.4
0.3
2
0.2
1
0.1
0
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
result in a 14.5 per cent decline for all of 2013. Since
this reduction in listings supply is expected to be greater
than the drop in sales, a slight rise in the ratio of sales
to active listings to 15.2 per cent is forecast for 2013,
following its four-year low of 14.2 per cent in 2012.
Since this signals a buyers’ market locally, we expect
condominium values to remains soft. Specifically, the
median price is forecast to decline again, by 0.5 per
cent this year, on the heels of a 1.7 per cent dip in 2012.
The medium term looks a little better, with sales forecast to begin rising in 2014. This, along with ongoing
drops in listings, is forecast to modestly tighten the
market and lift the median price each year between
2014 and 2017.
−1
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Vancouver’s new condominium market seemed well on its
way to recovery after the end of the 2008–09 recession,
but recent events are casting a cloud on the market all
over again. True, absorption of new units rose briskly
last year, but it remained below its 10-year average and
was roughly matched by the completion of new units. This
left the inventory of completed but unsold apartment
condominiums very high by the past decade’s standards. Accordingly, cautious builders are forecast to
break ground on only about 6,900 units this year, a
sharp 28 per cent decline from the 2012 level of activity.
Unit sales
Active listings
Months’ supply
Median price ($)
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
13,176
–14.1
12,943
–1.8
10,681
–17.5
9,795
–8.3
10,289
5.0
10,565
2.7
10,699
1.3
10,871
1.6
6,098
23.4
5,636
–7.6
6,260
11.1
5,355
–14.5
4,811
–10.1
4,584
–4.7
4,486
–2.1
4,513
0.6
5.6
5.2
7.0
6.6
5.6
5.2
5.0
5.0
363,825
8.4
372,567
2.4
366,263
–1.7
364,593
–0.5
369,527
1.4
378,133
2.3
390,733
3.3
405,902
3.9
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
5,793
146.0
7,177
23.9
9,616
34.0
6,922
–28.0
7,844
13.3
9,099
16.0
9,540
4.8
9,777
2.5
Under construction
7,761
–42.8
10,014
29.0
13,092
30.7
12,502
–4.5
11,040
–11.7
10,661
–3.4
10,743
0.8
10,728
–0.1
Completions
8,124
–12.2
4,635
–42.9
6,441
39.0
8,888
38.0
8,931
0.5
9,092
1.8
9,529
4.8
9,787
2.7
1,818
208.0
1,496
–17.7
1,547
3.4
1,933
24.9
2,029
5.0
1,866
–8.1
1,719
–7.9
1,541
–10.3
Absorptions
6,733
–26.0
5,181
–23.0
6,501
25.5
8,239
26.7
9,133
10.8
9,200
0.7
9,674
5.2
9,987
3.2
3.2
3.5
2.9
2.8
2.7
2.4
2.1
1.9
Months’ supply
f = forecast
Next year looks a little better, with starts forecast to rise
13 per cent to 7,800 units. Modest advances are expected
in subsequent years, but apartment condominium starts
are expected to remain below the past decade’s peaks
throughout our forecast. With starts expected to stay low,
at least compared with the previous decade, and demand
rising throughout our forecast, we expect inventories
will slowly make their way down to more a sustainable
level by the end of the forecast.
Despite the 2012 drop in Vancouver’s median condominium price and a further decline expected in 2013,
the area’s affordability is forecast to remain the weakest
by far among this report’s eight cities, both this year and
throughout our forecast. For instance, principle and interest payments on the median Vancouver condominium
unit in 2012 were a full 20 per cent above, in dollar terms,
those in Toronto, this report’s second least affordable
city. Vancouver’s affordability is expected to remain
similarly challenging throughout our forecast.
Victoria
(per cent)
15–24
25–39
40–54
55–74
75+
30
25
20
15
10
5
0
1993
2005
2017f
f = forecast
C
ondominium markets in Victoria continue to
struggle. Soft demand due to weak employment
growth and poor affordability, combined with a
supply overhang in both the new and resale markets, is
weakening prices. Only slight improvement is expected in
the medium term as the local economy expands relatively
modestly. Sales, price growth, and starts will all remain well
off peak levels seen during the pre-recession boom.
Markets for both new and resale Victoria apartment
condominiums remain tepid and are exhibiting few
prospects for immediate improvement. Both markets
seem oversupplied. Demand is being constrained by
poor affordability, a soft job market, and weak population growth. Conditions are thus forecast to improve
only gradually. For the first time since 2008, sales of
existing apartment condominiums fell below 1,300 units
at an annual rate in the fourth quarter of 2012 and the
first quarter of 2013. This sets the stage for our forecast
of a 15 per cent drop in condominium sales for 2013.
This would be the fourth straight annual decline and
put transactions at just over 1,300 units in 2013, down
from nearly 2,200 units in 2009. Sales are forecast to rise
5 per cent in 2014 as the job market begins to improve.
Sustained, albeit modest, employment growth predicted
between 2015 and 2017, along with only soft increases
1,500
100
1,200
80
900
60
600
40
300
20
0
0
1998 00 02 04 06 08 10 12 14f 16f
f = forecast
Series Database.
in prices, will keep sales inching higher in the medium
term. They are nonetheless expected to remain below
their 2007 peak throughout our forecast.
Active listings of apartment condominiums have risen
significantly in the past four years, although the 2012
increase was only about 1 per cent. We expect new listings to drop roughly 18 per cent this year, largely because
potential sellers will hesitate to offer their units in a soft
market. This will keep the sales-to-active-listings ratio
at 13 per cent, still deeply in buyers’ market territory.
24
22
20
18
16
14
12
10
(per cent)
2,600
2,300
2,000
1,700
1,400
1,100
800
500
1999 01 03 05 07 09 11 13f 15f 17f
50
30
40
20
30
10
20
0
10
−10
−20
0
1998 00
02 04 06 08 10 12 14f 16f
f = forecast
Estate Association.
f = forecast
Estate Association.
Employment Growth
Current year
0.5
20−year average
(per cent)
6
4
0.4
0.3
2
0.2
0
0.1
−2
0
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
Series Database.
For 2014, a modest increase in sales and another decline
in listings should lift the ratio to 17 per cent, but it will
hover near this level in the medium term. The frail market was reflected in a 6.5 per cent price drop during 2012,
the third drop in the past four years. A further 1.7 per
cent price dip is forecast for 2013, but a 3.6 per cent
rise is expected in 2014 as the market tightens slightly.
We expect similar annual price gains in the medium term.
Poor affordability is an important drag on the local condominium market. Victoria’s mild climate, genteel culture, and attractive surroundings are a natural magnet
−4
1998 00
02
04
06
08
10
12
14f 16f
f = forecast
for retirees, who historically have favoured condominiums. Indeed, in 2012, a third of Victoria’s population
was aged 55 or more, the highest proportion among our
eight cities. But average annual growth in the population
of this age group over the past three years has been the
lowest among our eight cities, at least partly because
condominiums in this area are expensive. Victoria’s median
condominium price was below only Vancouver’s during
five of the six years to 2010. As a result, principle and
interest charges are high relative to local incomes.
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
1,823
–16.7
1,648
–9.6
1,548
–6.1
1,323
–14.5
1,385
4.7
1,396
0.8
1,445
3.5
1,498
3.6
Active listings
908
14.8
1,024
12.8
1,032
0.8
850
–17.7
661
–22.1
646
–2.4
694
7.5
721
3.8
Months’ supply
6.0
7.5
8.0
7.7
5.7
5.6
5.8
5.8
290,783
4.3
287,237
–1.2
268,633
–6.5
264,180
–1.7
273,783
3.6
285,831
4.4
296,332
3.7
306,688
3.5
Unit sales
Median price ($)
f = forecast
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Starts
801
476.3
509
–36.5
608
19.4
461
–24.2
547
18.6
604
10.4
620
2.6
631
1.8
Under construction
959
–18.1
882
–8.0
833
–5.6
728
–12.6
749
2.9
772
3.1
778
0.8
779
0.1
Completions
555
–64.4
452
–18.6
525
16.2
490
–6.6
527
7.4
584
10.9
618
5.8
631
2.1
299
–2.4
301
0.8
308
2.2
333
8.1
299
–10.2
255
–14.6
227
–11.1
198
–12.8
556
–62.5
442
–20.4
590
33.3
447
–24.2
549
22.9
628
14.4
640
2.0
657
2.7
6.5
8.2
6.3
8.9
6.5
4.9
4.3
3.6
Absorptions
Months’ supply
f = forecast
Against this backdrop, a poor market for new construction is virtually guaranteed. Although absorption of new
apartment condominium units rose to a three-year high
of 590 units in 2012, this trailed the volumes recorded
during the previous decade. Moreover, since this was
nearly matched by the simultaneous completion of
525 new units, the backlog of unsold new apartment
condominiums remained high.
Accordingly, apartment condominium starts are forecast
to drop 24 per cent, near to 460 units, in 2013. This is
barely a third of the peak volumes hit in 2006 and 2007.
The medium term looks only slightly better. Population
growth is forecast to remain modest, limiting absorption
gains. Starts will inch higher beginning in 2014, but
remain relatively subdued throughout our forecast.
Definitions and Concepts
Terminology used in the Metropolitan Condo Outlook:1
Housing starts—Refers to the beginning of construction
work on a building, usually when the concrete has been
poured for the entire footing around the structure, or at
an equivalent stage where a basement will not be part
of the structure.
Long-term supply—The number of months needed to
absorb units under construction and those complete
and unoccupied (total supply). It is defined as the ratio
between total supply and absorbed units (average for the
last 12 months).
Months’ supply (new condos)—The number of months
needed to absorb units that are completed but not absorbed.
Multiple starts—The sum of semi-detached starts, row
starts, and apartment and other non-single-detached
starts. These starts are distributed among five tenures:
homeownership, rental, condominium, co-op, and other.
Unit sales—The number of existing apartment condo-
minium sold on the Multiple Listing Service (MLS).
Active listings—The number of apartment condominium
Under construction—Units started but not completed.
for sale on the MLS.
Completions—Refers to units where all the proposed
construction work has been performed or, in some cases,
where 90 per cent of construction work has been completed and the structure is fit for occupancy.
Sales-to-active-listings ratio—The number of apartment
condominium sold divided by the number of active
apartment condominium listings.
Months’ supply (resale)—The number of months needed
Complete and not absorbed—Refers to inventories of newly
completed units that remain unoccupied.
Absorptions—Newly completed units sold or rented.
Units pre-sold or pre-leased are not included until the
completion stage.
Short-term supply—The number of months needed
to absorb unoccupied units. It is defined as the ratio
between unoccupied units and absorbed units (average
for the last 12 months).
1
to sell the current supply of active listings, based on an
average of recent months’ sales volumes.
Median resale price—The median price of all resale apart-
ment condominium units sold on the MLS. The average
price is used for Montréal and Québec City. Data do not
generally include figures for new construction sales.
Average resale price—The average resale condo price in
Montréal and Québec City. These data cover sales of all
condominium types, not just apartments. Data do not
generally include figures for new construction sales.
Sourced from: The Conference Board of Canada; Canada Mortgage
and Housing Corporation; Canadian Real Estate Association;
Quebec Federation of Real Estate Boards.
Standard Geographical Classification (SGC) 2006
Metropolitan areas with their component census subdivisions
Name
Type
Québec City
Name
Type
Brossard
City
Beaumont
Municipality
Candiac
City
Boischatel
Municipality
Carignan
City
Château-Richer
City
Chambly
City
Fossambault-sur-le-Lac
City
Charlemagne
City
Lac-Beauport
Municipality
Châteauguay
City
Lac-Delage
City
Coteau-du-Lac
Municipality
Lac-Saint-Joseph
City
Côte-Saint-Luc
City
L’Ancienne-Lorette
City
Delson
City
L’Ange-Gardien
Parish (Municipality of)
Deux-Montagnes
City
Lévis
City
Dollard-des-Ormeaux
City
Notre-Dame-des-Anges
Dorval
Cité
Québec
City
Gore
Township (Municipality of)
Saint-Augustin-de-Desmaures
City
Hampstead
City
Sainte-Brigitte-de-Laval
Municipality
Hudson
City
Sainte-Catherine-de-la-Jacques-Cartier
City
Kahnawake
Indian reserve
Sainte-Famille
Kanesatake
Indian settlement
Sainte-Pétronille
Village
Kirkland
City
Saint-François-de-l’Île-d’Orléans
Municipality
La Prairie
City
Saint-Gabriel-de-Valcartier
Municipality
L’Assomption
City
Saint-Henri
Municipality
Laval
City
Saint-Jean-de-l’Île-d’Orléans
Municipality
Lavaltrie
City
Saint-Lambert-de-Lauzon
L’Épiphanie
Saint-Laurent-de-l’Île-d’Orléans
Municipality
L’Épiphanie
City
Saint-Pierre-de-l’Île-d’Orléans
Municipality
Léry
City
Shannon
Municipality
Les Cèdres
Municipality
Stoneham-et-Tewkesbury
United Townships
(Municipality of)
Les Coteaux
Municipality
L’Île-Cadieux
City
Indian reserve
L’Île-Dorval
City
L’Île-Perrot
City
Wendake
Montréal
Longueuil
City
Baie-d’Urfé
City
Lorraine
City
Beaconsfield
City
Mascouche
City
Beauharnois
City
McMasterville
Municipality
Beloeil
City
Mercier
City
Blainville
City
Mirabel
City
Boisbriand
City
Montréal
City
Bois-des-Filion
City
Montréal-Est
City
Boucherville
City
Montréal-Ouest
City
Name
Type
Name
Type
Mont-Royal
City
Ottawa
Mont-Saint-Hilaire
City
Clarence-Rockland
City
Notre-Dame-de-l’Île-Perrot
City
Ottawa
City
Oka
Municipality
Russell
Township
Otterburn Park
City
Pincourt
City
Toronto
Pointe-Calumet
Municipality
Ajax
Town
Pointe-Claire
City
Aurora
Town
Pointe-des-Cascades
Village
Bradford West Gwillimbury
Town
Repentigny
City
Brampton
City
Richelieu
City
Caledon
Town
Rosemère
City
Municipality
Chippewas of Georgina Island
First Nation
Indian reserve
Saint-Amable
Saint-Basile-le-Grand
City
East Gwillimbury
Town
Saint-Bruno-de-MontarCity
City
Georgina
Town
Saint-Colomban
Halton Hills
Town
Saint-Constant
City
King
Township
Sainte-Anne-de-Bellevue
City
Markham
Town
Sainte-Anne-des-Plaines
City
Milton
Town
Sainte-Catherine
City
Mississauga
City
Sainte-Julie
City
Mono
Town
Sainte-Marthe-sur-le-Lac
City
New Tecumseth
Town
Sainte-Thérèse
City
Newmarket
Town
Saint-Eustache
City
Oakville
Town
Saint-Isidore
Orangeville
Town
Saint-Jérôme
City
Pickering
City
Saint-Joseph-du-Lac
Municipality
Richmond Hill
Town
Saint-Lambert
City
Toronto
City
Saint-Lazare
City
Uxbridge
Township
Saint-Mathias-sur-Richelieu
Municipality
Vaughan
City
Saint-Mathieu
Municipality
Whitchurch-Stouffville
Town
Saint-Mathieu-de-Beloeil
Municipality
Saint-Philippe
Municipality
Calgary
Saint-Placide
Municipality
Airdrie
City
Saint-Sulpice
Beiseker
Village
Saint-Zotique
Village
Calgary
City
Senneville
Village
Chestermere
Town
Terrasse-Vaudreuil
Municipality
Cochrane
Town
Terrebonne
City
Crossfield
Town
Varennes
City
Irricana
Village
Vaudreuil-Dorion
City
Rocky View No. 44
Municipal district
Vaudreuil-sur-le-Lac
Village
Tsuu T’ina Nation 145 (Sarcee 145)
Indian reserve
Verchères
Municipality
Westmount
City
Name
Type
Name
Type
Coquitlam
City
Alexander 134
Indian reserve
Coquitlam 1
Indian reserve
Beaumont
Town
Coquitlam 2
Indian reserve
Betula Beach
Summer village
Delta
District municipality
Bon Accord
Town
Greater Vancouver A
Bruderheim
Town
Regional district
electoral area
Calmar
Town
Katzie 1
Indian reserve
Town
Katzie 2
Indian reserve
Edmonton
City
Langley
City
Fort Saskatchewan
City
Langley
Gibbons
Town
Langley 5
Indian reserve
Golden Days
Summer village
Lions Bay
Village
Summer village
Maple Ridge
Kapasiwin
Summer village
Matsqui 4
Indian reserve
Lakeview
Summer village
McMillan Island 6
Indian reserve
Leduc
City
Mission 1
Indian reserve
Leduc County
County (municipality)
Musqueam 2
Indian reserve
Town
Musqueam 4
Indian reserve
Morinville
Town
New Westminster
City
New Sarepta
Village
North Vancouver
City
Parkland County
County (municipality)
North Vancouver
Point Alison
Summer village
Pitt Meadows
Town
Port Coquitlam
City
Seba Beach
Summer village
Port Moody
City
Spring Lake
Village
Richmond
City
Spruce Grove
City
Semiahmoo
Indian reserve
St. Albert
City
Seymour Creek 2
Indian reserve
Town
Surrey
City
Stony Plain 135
Indian reserve
Tsawwassen
Indian reserve
Strathcona County
Specialized municipality
Vancouver
City
Sturgeon County
Municipal district
West Vancouver
Sundance Beach
Summer village
White Rock
City
Thorsby
Village
Whonnock 1
Indian reserve
Wabamun
Village
Wabamun 133A
Indian reserve
Victoria
Wabamun 133B
Indian reserve
Becher Bay 1
Indian reserve
Warburg
Village
Capital H (Part 1)
Regional district
electoral area
Central Saanich
Cole Bay 3
Indian reserve
Colwood
City
East Saanich 2
Indian reserve
Esquimalt
Esquimalt
Indian reserve
Highlands
Langford
City
Edmonton
Devon
Itaska Beach
Legal
Redwater
Stony Plain
Vancouver
Anmore
Village
Barnston Island 3
Indian reserve
Belcarra
Village
Bowen Island
Island municipality
Burnaby
City
Burrard Inlet 3
Indian reserve
Capilano 5
Indian reserve
Name
Type
Name
Type
Metchosin
South Saanich 1
Indian reserve
New Songhees 1A
Indian reserve
T’Sou-ke 1 (Sooke 1)
Indian reserve
North Saanich
T’Sou-ke 2 (Sooke 2)
Indian reserve
Oak Bay
Union Bay 4
Indian reserve
Saanich
Victoria
City
Sidney
Town
View Royal
Town
Sooke
Insights. Understanding. Impact.
255 Smyth Road, Ottawa ON
K1H 8M7 Canada
Tel. 613-526-3280
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conferenceboard.ca

Summer 2013—metropolitan Condo Outlook

Transcription

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