While Metro Vancouver has seen a record-breaking pace of housing starts last year, the Urban Development Institute stated in its latest quarterly report that this was not enough to make a dent in the affordability crisis that has characterized the city’s real estate market for several years now.
Numbers from the Canada Mortgage and Housing Corp. revealed that builders began construction on 27,900 new homes in 2016, representing a 33 per cent increase in the pace from 2015. However, only 8 of the townhouses completed last year remained unsold by the end of December.
“[What that says] is that there is a huge demand out there,” UDI CEO Anne McMullin said, as quoted by the Vancouver Sun. “There’s not a lot of standing inventory, which means prices will stay high.”
And despite the CMHC’s earlier predictions of Metro Vancouver housing starts slowing down over the next two years in response to a weaker market, McMullin argued that builders are still bracing for strong demand.
The 15 per cent property transfer tax on foreign buyers, implemented by the B.C. government in mid-2016, has led to a noticeable downturn in the number of transactions in succeeding months—but this has not made Vancouver homes more attainable for middle-class buyers.
Townhome resales volume declined by 32 per cent year-over-year in January, but the benchmark price for this housing type fell by only 0.4 per cent over the previous half year (to $660,500). Meanwhile, single-family-home sales exhibited a more drastic 58 per cent year-over-year decrease in January, with the benchmark price going down by 6.6 per cent over the last 6 months (to $1.5 million).
5 highlights from CREA’s first release
Middle-class home buyers face mounting affordability pressures in Vancouver