Study: Housing prices are driving many buyers out of the market
Paul Luke
Province
Rising prices for condos across the Lower Mainland have triggered a jump in the number of unsold units in new developments, PricewaterhouseCoopers says.
Average price hikes of as much as 29 per cent in the last six months have sparked an affordability crunch for low-to-medium-income earners, the company said yesterday in a review of the region’s condo market.
“People who are buying condos for the most part tend to be individuals who are in an early buying stage, or young couples,” said review author Craig Hennigar.
“Consumers have to have a higher income to be able to afford the average product and we very quickly have a diminishing pool of potential buyers.”
The supply of pre-sale condo units in new developments jumped by more than 55 per cent from 2,780 units in January, 2006 to 4,350 units at the end of December 2006, Hennigar said. In the high-rise category alone, unsold units in pre-sale inventory jumped almost 75 per cent between December 2005 and December 2006.
The region’s highrise condo sector remains a seller’s market, but the pace of sales is slowing, thanks to escalating prices, Hennigar said.
“If we keep putting more and more product on the market we could be running into a bit of a glut of pre-sale,” he said.
Such an over-supply could spark price weakness or prompt firms to delay developing their properties, Hennigar said.
The median asking price for a new highrise condo in the region in the second half of last year was $500 a square foot. For a lowrise condo it was $325, and for a townhouse condo it was $240 a square foot.
Vancouver realtor Marty Pospischil of Dexter Associates Realty said strata condos priced at $600,000 to $800,000 in Vancouver’s downtown and west side are taking longer to sell.
“There is just not a lot of people with the equity or cash available to buy in that category,” Pospischil said.
“However, at the same time, condominium product under $500,000 is more active than it has ever been.”
© The Vancouver Province 2007