With a national struggle to balance supply and demand in real estate, the Vancouver market area saw extremely slow starts to the year, according to the recently released Altus Group 2019 Vancouver Flash Report. While there was strength in the Office sector, it was not enough to offset significantly lower transaction volumes for the other sectors, which saw decreases ranging from 21% (Industrial) to 74% (Apartment) according to the report. For new home buyers, affordability continues to be a challenge.
Slowed investment property sales in the first half of 2019 contributed to investment volumes less than half of the level record during the first half of period in 2018:
- Residential Land investment slowed in 2018, decreasing 16% from 2017, and in the first half 2019 was off to a very quiet start with investment totals down 70% from 2018.
- Industrial sector saw nearly 3.3M sq. ft. of space added in the 4 quarters ending in Q2 2019, however, it was less than the demand for additional space over the same period resulting in a 1.2% drop in the vacancy rate in mid 2019.
- Office sector only saw 500,000 sq. ft. of space added in the 4 quarters ending in Q2 2019, which was one-third the amount of three years ago. As a result, the office vacancy rate is at its lowest level since 2008 at 4.4%.
- Total New Home Sales were down for the second year in a row in 2018 with sales in projects of 20 or more units were down 10% from 2017. New home sales slowed further in first half of 2019 with both single-family and condo apartment sales only half the levels from the same time in 2018.
- Retail sector property sales softened slightly in 2018 from the record set in 2017, declining 6%.
- New Condo Apartment sector has seen extremely low level of inventory in recent years, but that pressure has now eased. A total of 105 condo projects were launched in 2018 for a total of about 18,000 units and another 32 projects launched in first half of 2019.
- While home buying intentions are down among current homeowners, this is offset by stronger intentions among current renters – the primary pool for first-time buyers
o Despite affordability continuing to be a challenge for first-time buyers, younger buyers play a key role with 40% of recent home buyers under 35 years of age
o On average, first time home buyers in Vancouver purchased homes that were 20% below overall average price, priced at just over 5x their annual income.
The Altus Group 2019 Vancouver Flash Report can be downloaded here.
Matthew Boukall kicking off our Vancouver State of the Market 2019 event to a full house this morning! A big thank you to our sponsors @GrosvenorAmer @GroverElliottBC #AltusVancouver pic.twitter.com/BCX109QDyK
— Data Solutions (@AltusData) November 15, 2019