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Supply Building in Vancouver’s Luxury Condo Projects

Steve Saretsky -

I had some of my comments featured recently in a Vancouver Sun article tilted, “Vancouver’s Luxury Builders should be nervous“. I’d like to add some further context as sometimes words can be misunderstood. There’s no doubt a trend transpiring across global property markets, a surplus of new luxury homes sitting on the market. A huge reason for this is the pullback from Chinese investment. Recent weakness in the Chinese economy, combined with tighter currency controls, has left property developers across the world, scrambling to fill the void. Vancouver is just one of many cities facing the same difficulties, if you want to call it that.

The housing market has basically switched back to a more local driven market, that has become increasingly price sensitive. This has left some developers with a glut of luxury homes. See case and point below for available inventory in some of Vancouver’s more expensive projects – courtesy of our friends over at Altus Group.

vancouver pre sales
New luxury development available in city of Vancouver

The pre-sale market has certainly shifted from the boom years of 2015/2016 when capital flight out of China ultimately peaked. As a result, more developers are transitioning to purpose built rental development (currently at record highs) and product that caters more towards affordability, which is still under supplied.

Vancouver new home sales by year
New home sales by year in the city of Vancouver.

 

 

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022