Ottawa's Condo Market to See Price Gains In 2007-08
Strong demand is expected in 2007 and 2008 for Canada's major condominium markets because of the healthy labor market, supportive interest rates and aging population.
39 % of Canadians surveyed would consider buying a new or resale condo, a 4 % rise from a similar survey in June 2006.
Several short- and long-term indicators support the large and growing popularity of the condo lifestyle. The hottest markets, notably Calgary and Vancouver, will see some cooling off from dramatic and unsustainable highs last year, but overall conditions will remain healthy and activity will be high.
Condo starts have posted an average annual increase of more than 16 % between 2001 and 2005, with multi-family homes accounting for nearly one-third of all new construction, compared to nearly one-fifth a decade ago.
However, the strong demand for condo units in most urban centers has led to a high sales-to-new listings ratio for apartments and condominiums and created a sellers' market.
Demand for condos would experience a slight dip because of rising prices across the country, leading to a cooling-down of condo construction activity.
Over the next year and a half, the pace of condo starts is expected to decline by about 6 %, while resale prices for condos are expected to dip in the western provinces but remain high.
Strong price gains, especially in western markets, have outpaced growth in personal income and led to a deterioration in condo affordability nationwide. While this decline will eventually dampen demand and lead to slower price growth in future, it is not a major problem for the condo market since condos are, and will remain, considerably more affordable than houses.
Meanwhile,the rapid increases in the price of single-detached houses in most cities, robust urban population growth and land scarcity, as well as strong immigration trends, would sustain demand and contribute to gains in the condominium market.
Ottawa appears to be the only market which will experience a faster pace of condo price growth among the five cities, with price gains rising slightly to 4.5 % in 2007-08 from 3.6 % in the previous period. Calgary is forecasted to see the biggest drop in condo price growth percentage-wise, falling by 16.1 % to 10.5 % over the next year and a half.