The Urban Development Institute (UDI) at its April 3 breakfast event welcomed speakers Jason Lo and Matthew Boukal from Altus Group. Altus provides advisory services and data solutions to the global real estate industry. Backed by data culled from 2016 to 2018, Lo and Boukal spoke about the current Canadian market, and the forecast for 2019.
“The recipe for success is a combination of getting approvals in a timely way, and it is also about transit infrastructure, because people do really care about their commute,” said Boukal. Affordability should be tackled in “a meaningful way,” and one of the main things to take into consideration in terms of the Vancouver market downturn, is that 2016 was a record-breaking year. The last two years of relative decline is actually a normal reaction to the government’s intervention to cool what it perceived as an overheated market.
“Government policies and interest rates are influencing demand, and the cost of land makes building affordability a challenge. This is definitely not being helped by the long development approval times.”
Boukal pointed out that in spite of the challenges, buyers “have shown great resilience in the face of government interventions, such as the mortgage stress test, and sales levels seem to be rebounding after the implementation of the policies quite quickly.”
In Greater Vancouver, higher inventories and slower demand have led to modest price decreases, but the demand for housing is still there.
So far in 2019, housing starts in Greater Vancouver are stable, but not growing. Nonetheless, Boukal said there are still opportunities in this market, “especially for investors and people who have equity already and would like to move up.”
Although Vancouver is expensive, its great climate, beautiful surroundings and connections to Asia and global markets make it attractive. Transit development planned around an expanded regional Skytrain system are providing more potential for continued development.
“The good news for developers is that people still want to buy homes here,” said Boukal. The demand is up to 11 per cent who want to buy now, from the 10 per cent of people last year who were planning to buy in the winter of 2018.
“If the city picks up the approvals process, there will even be homes available to buy.”