The long-predicted soft landing for condominium markets in cities across Canada is in sight for 2015, with modest gains in sales and prices in most major Canadian cities, according to the latest Conference Board of Canada/Genworth Canada condo report.
The reports forecasts condominium price appreciation in most major cities, with the exception of Calgary and Edmonton, which are expected to experience some softening as a result of lower oil prices.
“From a national perspective, these findings support an overall balanced outlook on Canada’s condo market for 2015, with the exception of certain oil-exposed regions,” said Stuart Levings, president and CEO of Genworth Canada. “We continue to see evidence that population growth and employment remain key drivers of demand for condos in urban centres.”
Divergent underlying economic conditions help to explain the majority of the regional differences in sales and prices. According to the report, Toronto and Vancouver will see the strongest GDP advances, while economic growth will be weakest in Calgary and Edmonton. This uneven economic backdrop, combined with growing inventories in some markets, is expected to trim starts in all but Quebec City, Ottawa, Vancouver and Victoria.
Still, all eight cities are predicted to experience decent population growth over the forecast period, providing continued support for condominiums. “While the health of apartment condominium markets varies significantly by region, nowhere do we see a bubble about to burst,” said Robin Wiebe, senior economist at the Centre for Municipal Studies at The Conference Board of Canada.
The Conference Board projects the following for these major cities:
Québec City will see its second straight year of sales growth although most of that activity is expected in the second half of the year as GDP and employment growth trend upward. Prices will rise only modestly but starts are projected to edge higher after two straight years of decline.
Montréal’s challenged economy will result in moderate price growth. Oversupply is intensifying as demand fails to keep pace with the still rising number of units under construction. A slight market correction is a real forecast risk.
Ottawa will benefit from a gradually strengthening economy. Sales will inch higher in 2015 with additional growth forecast in coming years, yet remain well off the pace set earlier in the decade. Prices will edge up but starts are expected to jump by almost 10% in 2015 after two years of decline.
Toronto’s continuing healthy population growth and relatively positive GDP and employment outlook will generate ongoing increases in sales and prices, although gains will be moderate compared to peak years earlier in the decade. Housing starts will decline for the third consecutive year, reducing the likelihood of a significant market correction.
Calgary’s economy will be hit in 2015 as declining oil prices lead to declines in GDP and employment. The soft economy will result in price and sales declines in 2015. Starts are also expected to retreat as the market adjusts to this rapidly shifting economic landscape.
Edmonton’s condominium market will also experience declining sales and prices in 2015. As in Calgary, the depth and duration of the market’s downturn directly depend on oil prices.
Vancouver’s housing recovery is expected to largely continue in 2015, producing further sales and price growth. Nevertheless starts are expected to remain relatively low as inventories remain stubbornly high. Offshore demand continues to boost prices in this market making it the report’s least affordable city.
Victoria’s condominium market will be positively impacted by a rallying economic outlook and modestly improved job growth. Although sales and price advances will remain very mild by recent standards, they will continue. Large inventories of unsold apartments will keep apartment condominium starts low.