TORONTO — Altus Group recently released data on 2018 new homes trends and a 2019 outlook for the new homes sector for many major markets across Canada, including Vancouver, Calgary, Edmonton, the Greater Toronto Area (GTA), Montreal and Hamilton/Kitchener-Waterloo.
According to the findings, at the start of 2018, the supply of available new homes in both the Vancouver and Toronto markets was constrained, particularly in the condominium apartment sector which contributed to the rapid rise in pricing in 2017 and impacted sales volumes at the start of 2018. The report finds new condominium apartment sales moderated in Vancouver and Toronto where the strong demand seen in 2017 softened in 2018.
A key challenge that has become more apparent in Vancouver has been the price sensitivity of consumers, with higher priced projects, or those priced above the competition, experiencing below average sales rates, indicates the release.
Despite a record new condominium apartment sales year in the GTA market in 2017, the impacts of mortgage rule changes and new development charges contributed to a decline in project launches and lower sales to start the year.
Year-to-date sales remain down by almost 50 per cent compared to 2017.
As for markets outside the GTA, they have continued to benefit from their relative affordability compared to Toronto, particularly in Kitchener-Waterloo where the new supply of condominium apartment product experienced strong demand in 2018, the findings state.
The new homes sector in Alberta continued to be impacted by low energy prices and weaker economic activity. The Edmonton market has been facing challenges from elevated inventory levels, a large stock of completed and unsold new homes, and the impact that weak energy prices are having on housing demand, states the release. The Calgary market performed stronger in 2018, with increased sales of both new condominium apartment and townhouse products on a year-over-year basis.
In Montreal, a sharp increase in demand for new homes led to peak sales levels. The market saw an increase in new home sales over the past three years and continues to experience demand for new condominium apartment homes, adds the release.
When it comes to the outlook for 2019, key findings include:
- Housing demand in 2019 remains positive across the country with elevated immigration levels, continued demand from first-time home buyers, and tight rental vacancies and elevated rents encouraging home ownership.
- Markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019, given the depth of the decline in 2018 and building off of the sales recovery.
- Calgary and Edmonton will continue to be impacted by the weaker economy but are not forecast to experience a material decline in overall sales volumes.
- The two markets that may see a decline in sales activity in 2019 are Montreal and Vancouver. Montreal had a strong sales year in 2018 and 2019 volumes are expected to decline as the market returns to more normal conditions. The Vancouver market is expected to see a modest decline in sales volumes as consumers react to higher borrowing costs and developers react to escalating construction costs in the face of lower revenue opportunities.
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