Supply in some areas may outstrip demand
Fiona Anderson
Sun
The hot condominium market in the Greater Vancouver area is showing signs of stabilizing, which may mean good news for purchasers but bad news for developers planning to build in some over-supplied areas, an adviser with PricewaterhouseCoopers says.
The recent upward pressure on prices should ease as pent-up demand for condominiums is being exhausted, Neil Atchison said at a presentation of PWC’s Greater Vancouver Condominium Market Review Thursday morning.
Atchison said if he were in the market for a condominium he would wait 12 to 18 months before buying. At that time, when the new units are ready for occupancy, many of the investors may be selling.
“Our view is that the large leaps that have occurred over the last 24 months have probably been dissipating and that we will be looking at more normal, rate- of-inflation-type, price increases going forward, at least in the short term,” Atchison said.
Add to that the increasing number of condominiums coming onto the market in the next two years and that means more choice for purchasers.
“Particularly looking at the downtown, a sizeable number of those are investors and the question is are they flippers or are they long-term investors. If they are flippers there is going to be a lot of resale product on the market, there is going to be a lot more competition. There’s going to be choice.”
While supply is catching up with demand in many areas, the number of proposed units in Burnaby/New Westminster, which are grouped as one area in the PWC report, and Richmond, may actually outstrip demand and create an over-supply, the report said. In Burnaby/New Westminster, the number of projected units was five times more than what was necessary for normal growth.
But that’s only if developers follow through with their current plans, Atchison said.
While developers should rethink decisions to build in Richmond and Burnaby/ New Westminster, there are opportunities in the Port Moody to Maple Ridge area and in east Vancouver, where there is still unsatisfied demand, the report said.
Jennifer Podmore, of Vancouver-based MPC Intelligence, which has created an online subscription database that tracks condominium developments in the Vancouver area, agrees that east Vancouver and the Port Moody area are great places to develop. But she wouldn’t rule out Richmond, New Westminster or Burnaby yet.
“While there is a significant amount of development that’s going into the Burnaby/New Westminster area there is also a lot of demand for that area as well as a lot of demand for the Richmond market which is helping fuel the developers’ interests in those areas,” Podmore said in an interview.
© The Vancouver Sun 2005