Mid-year update shows sales up in Calgary market
The beneficiary of a rental market where selection was less than limited, Calgary’s condo market saw sales skyrocket through the first six months of 2014.
According to CREB®, year-to-date condo sales (apartment and townhome) in the city rose by 22 per cent through the first six months of 2014, increasing from 3,698 last year to 4,503 in 2014.
The totals still fall short of peaks recorded in 2007.
“The tight rental market, strong net-migration, wage growth and low interest rates all supported growth in ownership demand,” said CREB® chief economist Ann-Marie Lurie. “This, combined with diminishing supply in the more affordable single-family sector, has generating rising sales in the condominium sector.
Moreover, the amount of new condominium listings have been improving, giving consumers more choice. In fact, by June, the condominium apartment sector moved toward more balanced conditions.”
Canada Mortgage and Housing Corp. (CMHC) reported Calgary’s rental vacancy rate sits at 1.4 per cent. Broken down by sector, condo apartment sales totalled 2,494 units, a 23 per cent increase over the same time last year. Condominium townhouse sales increased to 2,009, a 20 per cent increase.
Prior to this year, new listings for condominium apartments had been declining for the better part of the past three years, which helped reduce the excess inventory and support price gains in the sector, said Lurie. Through the first six months of this year, new listings in the condo apartment market have risen by 12 per cent, while condo townhome listings increased by 10 per cent.
When it came to how much Calgarians were parting with to enter the condo market, apartment-style benchmark prices totaled $299,700 in June, a new high in the condominium apartment sector and 13.5 per cent increase over the previous year.
Meanwhile, the benchmark price for townhouse-style units reached $326,000, still shy of previous records.
While Lurie noted price gains have been higher than expected so far this year, she also added it wasn’t until June 2014 that unadjusted monthly benchmark prices for condominium apartments recovered from previous highs.
“As citywide condominium apartment prices have finally recovered from 2007 highs, we would expect this will continue to encourage some listings growth,” said Lurie. “However, as this market has moved into more balanced conditions, and if inventories continue to rise, price growth should ease throughout the remainder of the year.”
Looking forward, the annual average benchmark price is expected to total $318,267 in 2014, an eight per cent increase over the previous year. In the new condo market, multifamily starts in June hit 1,780, a nearly five-fold increase from the 358 units that broke ground last June, according to CMHC. Through the first five months of 2014, multi-family starts in Calgary more than doubled, increasing to 5,971 from 2,477 in 2013.
“The trend in total housing starts recorded a pronounced gain in June, primarily due to an elevated pace of multi-family construction,” said Richard Cho, CMHC’s senior market analyst for the Prairie and Territories region. “A low inventory of complete and unabsorbed units combined with elevated demand continues to support the rise in multi-family construction this year.”