The supply of new presale homes released to market in the Lower Mainland has plummeted by nearly half, according to the Mid-Year 2019 Real Estate Insights report by real estate marketing and research firm MLA Advisory.
Despite this huge reduction in supply, the rate of take-up is even slower, with just 14 per cent of the new homes released in June sold in the same month – even lower than the poor showing in April of 20 per cent.
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Only 4,123 new condos and townhomes were released between January and June 2019 across the region, compared with 7,753 new condos and townhomes in the first six months of 2018. That’s a 47 per cent decline in new home supply.
The report said, “This massive reduction in housing supply, which would be built and occupied over the next one to four years, will have long lasting ramifications to our housing market in the future, as steady migration and population increases are still expected.”
Source: MLA Advisory
Regarding the lacklustre uptake rate, MLA Advisory wrote, “As seen in the previous month, many developers are holding longer preview periods to garner more interest from prospective buyers who are looking broadly geographically in this highly competitive market. ”
For the latter half of 2019, MLA Advisory said that it is forecasting 27 project launches with over 3,500 new condo units to be released across Greater Vancouver and the Fraser Valley between July and December. The report said, “Richmond is expected to be the most active submarket for the remainder of 2019, with approximately five project launches contributing over 700 units.”
MLA predicted that new home sales would likely be slow for the rest of the year, before recovering in 2020, and this could affect some project launches currently slated for this fall.
The report authors wrote, “Looking ahead, as current inventory levels rise and projects take longer to sell, we anticipate many of these projects will hold their sales launch to 2020 and wait for more favorable conditions. This will cause a backlog of approved projects that we have not yet seen in the Lower Mainland… Though demand, in theory, is exceeding the supply we are bringing to market, buyers are reluctant to commit to purchasing decisions until they believe the market has reached the bottom. Once that reluctance has dissipated, market activity will again pick up and our market will normalize.”
Glacier Media Real Estate