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CBC
a day ago
- Business
- CBC
Metro Vancouver's condo market is slumping. Here are 4 key factors behind the slowdown
4 factors behind B.C.'s depressed condo market 17 hours ago Duration 2:58 Social Sharing After years of soaring prices and new builds, Metro Vancouver's condo market is showing signs of strain with projects stalling, sales declining, and developers hitting pause. Industry experts say it's the result of a "perfect storm" of four major forces converging: high interest rates and softening rental income, reduced foreign capital and lower immigration — all of which have created a challenging environment for both buyers and builders. "[We] are at a breaking point, the industry is doing terribly," said Anne McMullin, CEO of the Urban Development Institute. "It's not just that the industry is struggling; it's our inability to deliver homes that people can afford." Rising interest rates, declining rent Increase in borrowing costs has reduced affordability for buyers and made it more expensive for developers to finance new builds, says McMullin. Just five years ago, mortgage rates were near historic lows, making it relatively affordable for buyers to borrow large sums and invest in real estate. But those rates have climbed significantly, pushing up monthly mortgage payments. WATCH | Some real estate advisors question Surrey's decision to convert condos to rental units: Some real estate advisers question Surrey's decision to convert condos to rental units 3 days ago Duration 1:36 Surrey city council has approved changes to development applications for converting hundreds of condo units into rental units. As Pinki Wong reports, some real estate advisers think the shift will mean fewer homes for younger generations to purchase down the road. The result is higher "carrying costs" — the total expense of owning a condo, including mortgage payments, property taxes and maintenance fees. The City of Vancouver's 2025 budget includes a 3.9 per cent property tax increase and an 18.2 per cent hike in utility fees, together adding hundreds of dollars to annual expenses. "It costs more to build a unit or a home than the average person in the Lower Mainland can afford," said McMullin. "When it's costing more to build … we see project cancellations and we start to see projects not going ahead." At the same time, condo and rental price growth has stagnated, which means homeowners can no longer count on steady price growth to absorb the costs. According to the latest housing market update from the B.C. Real Estate Association, residential prices in the province in May 2025 were down 4.2 per cent at $959,058 compared to the same time last year, while residential sales were down 13.5 per cent. In Vancouver, average asking rents for a two-bedroom fell from $3,440 in 2024 to $3,170 in 2025, according to the latest figures from Statistics Canada. Though economists expect rates to begin to decline slightly in the second half of the year, persistent inflation risks and ongoing U.S. trade tensions could keep borrowing costs elevated for now. Decline in foreign capital and immigration levels A second factor cooling B.C.'s condo market is the decline in foreign investment, largely due to the federal ban on non-residents purchasing residential property in Canada. Initially enacted in January 2023 under the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the ban was recently extended by two more years and is now set to expire on Jan. 1, 2027. It prohibits foreign commercial enterprises and non-resident individuals from buying homes anywhere in Canada. The federal government says foreign ownership has fuelled worries about Canadians being priced out of housing markets in cities and towns across the country. But for developers, the measure has made it harder to access the capital needed to get projects off the ground. "While the intention is understandable, the current broad-brush form of the ban also limits access to foreign capital that could help builders meet presale thresholds and finance new construction," the Homebuilders Association Vancouver said in a statement. The association has called for a more flexible approach to the policy. The group suggests Canada could look to Australia's model, which allows foreign buyers to invest in new builds under specific conditions, such as requiring the units to be rented out or limiting resale timelines. Another drag on demand is a recent slowdown in population growth. WATCH | Metro Vancouver housing market looking good for buyers: analyst: Metro Vancouver housing market looking good for buyers: analyst 19 days ago Duration 7:46 A recent advertisement from a Surrey real estate agent which touted a 25 per cent discount on a housing unit highlights how buyers have an advantage in the current Metro Vancouver housing market. Mark Ting, a partner with Foundation Wealth and On The Coast's personal finance columnist, says that the trend of housing prices going down may be sustained. As of spring 2025, B.C.'s population stood at approximately 5.7 million. But the province recorded a net population decline, with 2,357 fewer residents compared to the previous quarter. The drop comes amid changes in federal immigration policy. Under its 2025–2027 Immigration Levels Plan, the federal government has introduced targets not only for permanent residents but also for temporary residents, which include international students and foreign workers. The plan aims to reduce temporary resident volumes to no more than five per cent of Canada's total population by the end of 2026. The Canadian Mortgage and Housing Corporation says the condo slowdown is likely to persist this year as supply increases outpace demand.
News.com.au
20-06-2025
- Business
- News.com.au
Why Geelong's homes isn't target stacking up
Geelong's lofty target to deliver nearly 130,000 new homes by 2051 is doomed to fail unless something gives to make building apartments stack up better. An Urban Development Institute of Australia study revealed 15 projects where high density permits approved in Geelong's CBD have not yet progressed. The report detailed a $200,000 gap between the median price apartments are selling for in Geelong and the minimum price per new apartment to remain viable in an eight-storey building as construction costs escalate. The residential and mixed use approved developments include landmark projects from Gurner and Monno, a large scale built-to-rent development and the region's first vertical retirement village. Other properties have been put up for sale, such as a 14-level residential and office tower at 118 Corio St. The only major residential projects under way are an 11-storey social housing tower and the seven-storey Motif apartment complex near to the Latrobe Terrace flyover. The report, Making it Stack: Infill Feasibility in Regional Victoria, highlights the need to accelerate infill development in Geelong to meet housing goals but paints a grim picture around escalating construction costs. The report identifies key challenges such as inflexible planning frameworks and high costs, recommending greater planning flexibility, feasibility testing and incentives to support viable infill housing development, especially if they are to provide affordable housing options. Apartments and townhouses are supposed play a significant role in driving 60 per cent of the new homes in Geelong by 2050 by unlocking infill sites within existing urban boundaries. But only 20 per cent of all new dwellings are being delivered through infill areas. The cost to build apartments is typically twice the rate per square metre than houses, with interest rates, construction and labour costs, developer contributions and mandated affordable housing provisions also hurting viability. Rigid planning rules means decision-making doesn't consider feasibility alongside factors such as heritage, height and density; while urban design frameworks often set height limits below a level deemed viable for development, the study found. The research paper recommendations include allowing greater flexibility in planning rules, testing feasibility before finalising planning frameworks, updating outdated planning schemes, and trialling incentives in key precincts to support infill housing. UDIA Geelong committee chairman Nick Clements said the price point new apartments need to hit to remain viable is the biggest issue that faces building in Geelong. 'You would have to sell an apartment for greater than what a house and land package can be obtained in Gen Fyansford estate, or in Highton,' he said. Fyansford is Geelong's most expensive greenfields market. 'We really need the prices of established homes in Geelong to substantially increase before there can be a greater attractiveness for people to purchase smaller, medium density and apartment stock,' Mr Clements said. 'Interest rates haven't helped, with home prices depreciating in Geelong over the past couple of years.' The median price for existing apartments was $621,000, the study revealed, but the minimum feasible cost to sell a new apartment in Geelong was between $805,000 and $819,000. Mr Clements said the big wages on state government infrastructure projects in Melbourne was creating a local skills shortage in key trades causing labour costs to grow exponentially, while materials costs have stabilised at around 30 per cent above pre-covid levels. Hygge Property director Adam Davidson said a cost-revenue analysis revealed seven storeys was the minimum needed to feasibly build apartments in Geelong, but that would require planners showing more discretion around height or density, if more infill development was to get off the ground. 'It's easy for councils to set frameworks encouraging three to five level development because most people relate to the street level of projects,' Mr Davidson said. 'Unfortunately, because we sell apartments for less in the regions the math shows it's very difficult to deliver apartments at less than six levels in a regional context.' Mr Clements, who is senior principal town planner for Tract Consulting in Geelong, said the number of approved developments shows there's an appetite to build, but the current financial conditions don't allow it. 'The state government has made it very clear they want to see more housing in the CBD,' he said. 'The market is saying we'd love to build it, but we can't make it stack up.' Mr Clements said suburban areas, such as Pakington St North, faced the same issues. 'There's a permit for a site next to the Petrel Hotel that's a perfect example. A building was demolished because there was a permit granted for a multi-level residential and retail outcome, but it hasn't been acted upon because no-one can make it financially viable.' Mr Clements said the government had provided approval pathways bypassing councils for certain projects, but costs remained the overarching problem. 'In the suburbs we still see councillors overturn recommendations from the officers, but they're dealing with 20 dwellings here, 20 dwellings there. They're really a drop in the ocean.' Developers rely on financiers for the vast majority of projects, who assess risk based upon whether a proposal can reach certain financial milestones. 'There's very few developers that you can say are very brave to pull the trigger on various projects and they've got very good relationships with lenders that allow them to be quite bold,' Mr Clements said. City of Greater Geelong executive director placemaking Tennille Bradley said the City was continually in discussion with developers to consider how it can facilitate new apartments and mixed-use development in the CBD. Facilitating development was the primary discussion in a CBD revitalisation forum in March, Ms Bradley said. 'Many of the comments coming from the industry expressed the need for financial intervention, including property related tax consideration, to increase feasibility for development in central Geelong, in addition to possible changes to the planning controls,' she said. The Central Geelong Framework Plan (CGFP) has a goal of 16,000 new residents in central Geelong by 2050. 'Pipelines for apartments and townhouses in central Geelong are incredibly important for the growth and vibrancy of our city, and to help us achieve the housing targets given to us by the state government,' Ms Bradley said. The state government is responsible for planning decisions in the CGFP area and for all developments that are five storeys and above, Ms Bradley said. 'The City recognises that the heights in the CGFP are discretionary and many of the approved projects exceed the recommended heights in the plan for various reasons, one of which being to ensure feasibility.' Ms Bradley said the City continues to advocate for good development outcomes in central Geelong. 'High quality projects that provide high amenity to the community and adequately integrate with the streetscape to ensure an attractive, liveable and vibrant city centre are important to Council, central Geelong residents, the Greater Geelong community and developers,' she said. 'The Mayor continues to advocate for better economic frameworks for central Geelong developers to make sure that approved projects can progress and contribute to additional housing in Geelong.'
Vancouver Sun
03-06-2025
- Business
- Vancouver Sun
Vancouver seeks a new way of requiring infrastructure upgrades from developers
City of Vancouver staff are proposing developers help pay for the cost of building and maintaining municipal infrastructure as a condition of receiving a development permit, rather than earlier during the rezoning process. It's a response to the province's passing legislation in 2024 to build more housing by, among other actions, reducing the often-long and costly process of rezoning a site. The proposal, which comes to Vancouver city council on Tuesday, is to send a set of bylaw changes to public hearing for further consideration. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. Negotiations around what a developer provides to pay for sewers, drainage, water, solid waste, transportation and public areas serving its site have traditionally been part of the rezoning, which can take years. After this, a developer applies for a development permit. The intent of the change is to levy developers for that municipal infrastructure in a more formula-based way, to avoid drawn-out negotiations, when a development permit is being considered. 'Under Bill 16, conditions are supposed to be more transparent and predictable. Ideally, this means for the most part there should be much more standardization and not long negotiations,' said Anne McMullin, president of the Urban Development Institute, which represents the real estate and building industry. 'A key shift is that the city will now have the ability to secure public amenities, facilities, utilities and land at the development permit stage rather than through the rezoning process.' She added, however, that there will be a period of 'wait and see.' 'We still have to see how it all actually works out. These are just the early steps to prepare for a post rezoning world.' A note from city staff said changes could allow projects or sites that don't require rezoning to proceed directly to seeking a development permit. This would include sites in areas such as the Broadway plan or Oakridge town centre. It could make sense for sites that are in pre-zoned areas, but applying the change to the entire city might just delay the lengthy negotiations between the city and a developer from the rezoning process to a later stage. A city staff note proposed that an amendment could include stating that the conditions sought by the city should be limited to those that are 'reasonably required' to address the direct impact of the development. That's vague, said Dean Johnson, senior vice-president of development at Wesgroup Properties. It would mean a developer would not know what it might have to pay in order to mitigate the impact of a project or how it could offset the cost of that until the stage of applying for a development permit, said Johnson. 'That seems a bit broad,' he said. jlee-young@
Globe and Mail
14-05-2025
- Business
- Globe and Mail
Former Vancouver mayor whose housing policies made him unpopular now federal housing minister
Gregor Robertson, Canada's new housing minister, is a former Vancouver mayor blamed by some for presiding over a period of skyrocketing housing prices, but credited by others for bringing in precedent-setting policies aimed at tackling an affordability problem that has persisted since the 1990s. Mr. Robertson, who was appointed to Prime Minister Mark Carney's new cabinet on Tuesday, had a mixed record as mayor. Notably, he never managed to deliver on his promise to end street homelessness – though its rate of increase slowed while he was in office, and he did persuade the province to fund shelters that ran for the entire winter season, rather than only on cold or rainy winter days. Now, his critics and admirers are watching with interest to see how the bike-riding, environmentalist former mayor will handle a portfolio centred on a housing affordability crisis he once struggled to get higher levels of government to regard as more than a Vancouver-only issue. 'I hope he sees the flaws of the system,' said Rick Ilich, chair of the B.C.-based Urban Development Institute and CEO of Townline Homes Inc. Mr. Ilich, like others in development, appreciates the business-oriented approach of Mr. Robertson, who co-founded the Happy Planet juice company before he entered politics in 2005. Mr. Robertson served as an NDP MLA from 2005 until 2008, and then won three municipal elections. He served as mayor for 10 years. After leaving the mayor's office in 2018, he worked for a private sustainable-development company, Nexii, but left in late 2023 after the company ran into financial problems. 'He's actually a level-headed guy, measured in his approach. I suggest we might have an ally in getting through to government,' Mr. Ilich said, referring to the housing development industry. Randy Helten, a blogger and one of the mayor's most persistent critics, also hopes that Mr. Robertson has learned some lessons from his years enmeshed in the housing crisis. 'My only hope is that he's a changed man,' Mr. Helten said. Mr. Helten launched his blog, CityHallWatch, shortly after Mr. Robertson and his Vision Vancouver party initiated a new policy to encourage developers reeling from the 2008 housing collapse to switch over to building rental homes for the first time in decades. Using fee reductions and density bonuses as incentives, the STIR (Short-Term Incentives for Rental) program resulted in some new projects – and a huge uproar from some residents, including Mr. Helten, who believed developers were getting too much for too little affordable housing. 'He started off good, but with the global financial crisis I think he panicked and I think he was influenced by his donors,' Mr. Helten said. Vision Vancouver was unusually successful during its three election campaigns in raising money from developers, and also unions and left-wing supporters. In his last term, Mr. Robertson initiated a policy to award even greater density bonuses to developers who agreed to keep a certain percentage of the units in new buildings at below-market rents. And he announced a plan to build 1,000 social-housing units on seven different pieces of city-owned land. Three of those seven have only just started construction, while one is still sitting undeveloped. Stepan Vdovine, a vice-president at Amacon Developments and former president of the mayor's political party, said Mr. Robertson struggled to come up with housing solutions at a time when both the provincial and federal governments weren't that interested in what was viewed as a uniquely bad housing situation in Vancouver. He believes Mr. Robertson and Mr. Carney will make an excellent team because they both favour a pragmatic, business approach. 'He's not made for bureaucratic process. He wants action,' Mr. Vdovine said. But others in the development community worry that Mr. Robertson will try to attach too many environmental objectives – energy efficiency and water recycling, for example – to housing-support programs. They believe the pursuit of these goals has led to some of the current issues with unaffordability. 'All the new environmental costs, we're getting into $55,000 to $60,000 per home on that policy alone,' Mr. Ilich said. Chris Gardner, chief executive officer of the non-union Independent Contractors and Businesses Association, said he is concerned Mr. Robertson will carry on with policies that he said were flawed then and are still flawed. 'He said he would end homelessness and homelessness got worse, the streets got worse,' Mr. Gardner added.
Vancouver Sun
09-05-2025
- Business
- Vancouver Sun
Rennie lays off 31 employees, cites uncertain real estate market and 'structural' change
Leading condo marketing firm Rennie has announced it is laying off a quarter of its head office staff. blaming geopolitics, economic factors and artificial intelligence. 'It was a necessary step in response to a changing market, but no less painful,' the company said in a post to the professional networking site LinkedIn. The post did not indicate what departments would experience job losses, but noted that Rennie is reducing head office staff to 92 from 123 and added a plea for anyone hiring to consider its 'thoughtful, talented contributors who helped shape our culture and our business.' Rennie , founded by condo-marketing mogul Bob Rennie, made the announcement at a time when real estate sales have declined and the development sector has seen its inventory of unsold condominiums soar. The Urban Development Institute estimates the number of completed, unsold condos will soar 60 per cent to 3,500 by the end of the year. Stay on top of the latest real estate news and home design trends. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Westcoast Homes will soon be in your inbox. Please try again Interested in more newsletters? Browse here. Rennie analyst Roman Melzer, in an item published on the company's website, recounted the 'collapse in consumer confidence,' that followed the Jan. 20 inauguration of U.S. President Donald Trump and the air of uncertainty that came with his trade tariffs. In April, sales fell 24 per cent in Metro Vancouver from the same month a hear ago to 2,163 transactions. The so-called benchmark price, a type of average for typical homes sold, was down 1.8 per cent to $1.2 million for all property types. However, the company, in its post, said the 'moment is part of something bigger in the industry,' referring to geo political, economic urban affordability and AI-driven factors. 'The shifts we are seeing in real estate aren't temporary, they are structural,' the post said. 'And yesterday is never coming back.' The post said Rennie is 'responding with clarity, not caution, reimagining how we work, becoming leaner and more focused and embracing the tools that will help us serve better and move faster.' In March, Rennie announced its launch of an artificial-intelligence product under the name rCatalyst, which it called an 'AI-powered sales and marketing platform,' that will learn from the company's '30 million (plus) proprietary data points,' to refine sales approaches. However, it is still too soon to estimate how disruptive AI will be to the real estate sector, especially with the extent of the downturn in development, according to Tsur Somerville, Real Estate Foundation of B.C. professor in real estate finance at the University of B.C.'s Sauder School of Business. 'On the marketing side, there might be some AI uses, but a bigger thing is nobody's pre-selling,' Somerville said. Marketing campaigns 'have completely dried up, and that is a whole bigger part of the story.' Rennie, headquartered on West 1st. Avenue in Vancouver, operates in B.C., Washington state and California with more than 300 advisers in 10 locations offering advisory services to developers, presale marketing and property sales. depenner@
