Canada’s condominiums gained a foothold in 2017, outperforming other property types and ringing in a new era for the country’s housing market, according to leading real estate brokerage Royal LePage.
Closing out 2017, median condominium prices soared 14.3% year-over-year to C$420,823 (US$337,795), the fastest growth pace across all property types. By comparison, the median price of single-family homes (knowns as bungalows or detached homes) climbed 7.1% to C$522,963 (US$419,782).
The national composite price, compiled from proprietary property data in 53 of Canada’s largest real estate markets, increased 10.8% year-over-year to C$626,042 (US$502,023), according to the Royal LePage House Price Survey released Wednesday.
“We can say Canada is now a condo nation, like other advanced economies around the world,” said Phil Soper, the firm’s president and chief executive, in the report.
“Historically, condominiums have appreciated at a slower pace than detached homes… For now, demand for those relatively affordable spots in the sky is so high that the trend has been reversed,” he said.
There are several factors that have contributed to the condo market’s coming of age, according to Mr. Soper. Price overshooting in detached homes during 2015 and 2016 propelled provincial governments to impose cooling measures, which impacted those detached homes at a greater rate than condos.
In West Vancouver, for example, the average price of detached homes fell 6% year-over-year to C$3 million (US$2.41 million) in 2017, while average condo prices there rose 13.5% to $1.17 million during the same period, according to Mr. Soper.
“As builders respond, new projects will come on-stream and condominium price increases will moderate somewhat, but it won’t be happening in 2018,” Mr. Soper predicted.
Another important factor is simply affordability. Even with a faster pace of price growth, condos are still more affordable than single-family homes (median prices of C$420,823 for the former versus C$522,963 for the latter).
“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” Mr. Soper said.
|Canada: The Year of Condo|
|City of Toronto||$850,899||17.70%||$847,152||7.20%||$515,578||19.60%|
|City of Vancouver||$1,480,712||12.00%||$1,566,898||8.40%||$775,806||18.70%|
Note: *Home prices are in Canadian dollars
Source: Royal LePage
Condo developments tend to have better and more efficient use of public resources, Mr. Soper said. Unlike sprawling suburban areas, condos in big cities are less demanding on highway infrastructure, fire departments, police departments and other public services. “Condos are the future,” Mr. Soper said. “They are more affordable and more environmentally-friendly.”
Lastly, the increased popularity of condos is a direct result of more people choosing to stay close to their jobs and raise families in urban centers, a trend that’s prevalent in other metropolitan areas like Mumbai, San Francisco and New York, according to Mr. Soper, who has lived in all three cities.
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Toronto and Vancouver, in particular, will continue to benefit from the country’s strong economic growth and historic-low unemployment rate, he said. “Economic and population growth are the main driver of the real estate there,” Mr. Soper said.
The strengthening of the condo market was more pronounced in the short-term. On a quarter-over-quarter basis, condo prices rose 1.1% in the final three months of 2017, while prices of townhouses and detached homes fell 0.3% and 0.2%, respectively.
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