The apartment boom is a part of the Canadian real estate sector that has supported the recovery of the national economy. The condo supply is still increasing and defeatists warn that nothing can last forever. So is there a plateau to be reached and condos starting taking a down turn and why are they so attractive? Most of Canada’s main cities have seen the demand for condos increase, as a result condo builldings have been built on a large scale.
A condo is economical and saves on space; just look at how many homes can be built on a small plot of land compared to houses. Condos are often cheaper than a house in cities and its surrounding area and with many people moving into cities, this has created a considerable demand for new homes. Home-buyers, retiring baby boomers, and people emigrating are the most common apartment buyers.
The downtown area may see another four Calgary condominiums towers built if planning permission is given, at the moment the city is considering these applications according to the Calgary Herald. “It says to me people are pretty optimistic about the future, any of these plans are probably a two-year build, everyone’s looking two, three years out,” so said David Watson, the city’s general manager of planning, development, and assessment.
Today, economic indicators are quite positive about the condo market coming back into balance after a interval of prevailing supply over demand. The president of the Calgary Real Estate Board, is also very optimistic after sales of condos bounced back in June; believing the fall in amount of condos on offer and the demand for them balances each other well.
On an opposite note, some analysts are predicting a less than positive future, stating that there is too many apartment units and not enough demand. But on a more happier note, new analyses say that with the limited supply of land available for condo builds, the demographics and people emigrating to Canada combined, will mean that the boom seen should avoid collapse.
Phil Soper of Royal LePage has looked at the city planners’ estimates for demand against projects underway and firmly believes that there are not enough apartment projects in the big cities.
However, there are concerns about interest rates. A prediction of a cumulative 25 per cent fall in the national average price in the next 3 years, will be seen when income and population are considered, according to David Madani from Capital Economics. “There’s a really large disconnect between house prices and the fundamentals. We don’t think that this is sustainable,” Mr Madani said.
