Vancouver, Jan. 22, 2018 (GLOBE NEWSWIRE) -- MLA Canada has released its annual Market Intel real estate report, a review of the outgoing year, current market conditions and a forecast for 2018. The report by MLA Canada’s Advisory division anticipates 2018 will see over 11,000 units of concrete construction come to market. The report indicates that lengthy municipal approval processes and complexities around lending are the major threats to the needed supply levels reaching the Greater Vancouver housing market. In a global cities housing comparison, the Market Intel shows Vancouver’s affordability ratio at 17.4, almost double that of more normalized cities like Toronto and Seattle.
“Looking ahead, we anticipate slower price growth in 2018 among pre-sale projects similar to the resale market due to greater inventory and heightened competition which will benefit home buyers. A steady market with a relative slowdown will continue to encourage developers to innovate and design optimum product and unit mix for purchasers,” says Cameron McNeill, Executive Director of MLA Canada.
VANCOUVER’S AFFORDABILITY RATIO HIGHER THAN SEATTLE AND TORONTO
The gap between income and property values continues to widen in Vancouver in comparison to other cities such as San Francisco, Sydney, and Manhattan which are also considered as highly unaffordable, yet all continue to see growth—even with government attempts to curb price escalation.
Vancouver’s ratio at 17.4 is extremely high when compared to more normalized cities like Chicago, Austin, Houston, Seattle, and Toronto, with affordability ratios all between 4 and 10. If housing prices remain consistent, the ratio could begin to normalize with heightened income levels, which are anticipated to occur as the work force demands higher wages to sustain livability in the city.
PRE-SALE EXPECTING 33% CONCRETE SUPPLY INCREASE IN 2018
The real estate marketing company predicts that 62 concrete projects and more than 11,000 units will be released this year, an increase of over 33 per cent for concrete supply compared to 2017. This is largely due to a number of projects being delayed in their approvals process from the previous year.
Burnaby is expected to be the most active concrete market again, launching over 4,500 units in 2018 compared to about 1,920 in 2017. North Vancouver and New Westminster, which saw very few projects come to market in 2017, will experience an increase in supply over the course of this year.
PRICE, PUBLIC POLICY AND PACE IN VANCOUVER’S REAL ESTATE
Although the housing market slowed down last year in comparison to 2016, it was still extremely active – the Lower Mainland led the nation at almost 15 per cent in price escalation, while Greater Toronto was next at just over 9 per cent. Last year, the detached market moved to a balanced condition as the price of single-family homes deterred buyers, pushing them towards townhomes and condos. The condo market is expected to lead the market due to affordability and the price escalation for all product types will normalize at 8 to 10 per cent in 2018.
“Provincial or city-wide policy changes are expected in the coming months and will need to ensure the real estate market remains stable,” explains Ryan Lalonde, President of the project marketing company. “While we have seen that past government policies have had little long-term effects at curbing price escalation, government intervention is one of the top concerns for the real estate industry in 2018.”
THE REAL COSTS – FROM CITY ENTITLEMENT PROCESS TO CONSTRUCTION
The Market Intel report examines the impact of the city entitlement process and construction costs on the final purchase price. City approval timelines continue to be very lengthy, and projects that launched in 2017 in Vancouver, Burnaby, and North Vancouver averaged over 22 months. When you add the planning stages prior to a development permit submission, five to six years will have passed by the time homes in a typical high-rise complete construction.
According to a study by the Fraser Institute, in the City of Vancouver compliance costs for developers are extremely high, equating to nearly $78,000 per new home being built. While land costs have risen, construction costs have also increased almost $100 per square foot in the last several years and will likely pass $350 per square foot for mid–high quality concrete construction before end of year.
A SUMMARY OF THE FORECAST FOR 2018
Market fundamentals indicate 2018 to be a stable and positive year. GDP, job growth, consistent population and housing starts, plus nominal interest rate changes all maintain consumer confidence and a natural flow of investment. The largest threat to this forecast is the political landscape. Uncertainty around government policy intervention to cool housing costs in Vancouver and Toronto, along with U.S. impacts on the North American Free Trade Agreement could threaten stability.
ABOUT MLA CANADA
MLA Canada, McNeill Lalonde & Associates, is an established market leader, offering distinctive real estate services to developers. As Canada’s most comprehensive real estate marketing, sales, and lease-up organization, we are poised to redefine the industry with robust services and systems for the betterment of clients and the markets we work within. Tailored experiences are offered for every product type, from single-family up to large, mixed-use, masterplan communities, while adherence to a structured development lifecycle ensures project success from beginning to end. Visit mlacanada.com to become real estate intelligent.
Editor’s Note:
- To view the full MLA Advisory Market Intel 2018, visit http://bit.ly/mlaintel2018
- For access to the Market Intel infographics, click on http://bit.ly/mlaintel2018_images
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Attachments:
A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/6c4036fb-c245-4218-a146-f598e57891ea
Attachments:
A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/3dc0e773-a0da-4968-8a28-e39b78e16a1c