Because of technological advances and increasing government regulations, 2018 will be an interesting year for the real estate industry. With so many expected changes, staying on top of the latest trends will be key to prospering in the long term.
The outlook for different property types varies by region, but there are some commonalities seen throughout Canada. Here are a few things to consider for developers, investors and property owners alike.
Because of increasing demand in most markets, the condominium sector is expected to perform steadily in the near future. In 2017, the median condo price rose 2.2%. Baby Boomers and young professionals are especially in the market for condo units. Urban amenities make condos an attractive option. You should also expect to see a trend toward larger condo units, which is different from what we’ve seen in past years.
The market of single family homes is also expected to increase this year. In 2017, the price of detached homes increased by 6%, which is indicative of a healthy market. The average cost of these homes rose more than 8% over the last year.
Today, two-thirds of new homes built are multi-family homes. This is a significant shift from the mid-2000’s when less than half were multi-family homes.
For the first time in more than 4 years, the vacancy rate of office buildings has decreased. Now, there is only a 12% vacancy rate nationwide.
Who Is Buying
In recent years, we’ve seen an increased number of first-time home buyers, but that is expected to change by the early 2020’s. The Bank of Montreal think this will lead to stagnation in the market. To the contrary, an HSBC study found that 82% of non-homeowner millennials in canada intend to buy a home in the next 5 years. Only half have set an approximate budget, but two-fifths of current millennial homeowners had financial help from their parents.
It’s also worth mentioning that Canada has seen an increase of international investors in the real estate sector, mostly from France and Asia. Chinese investors are especially making an impact in the Vancouver market.
Markets to Watch
Toronto and Vancouver expect to see a 2.5% increase in GDP this year, according to PWC, but every market has its own opportunities and challenges. The key is understanding consumer preferences in your desired market, and knowing what external economic factors could play a role in the market progression.