Calgary & Edmonton Market Update
Wednesday September 12, 2018
Calgary Market Update [New Condos]
We are all aware that the economy in Alberta has suffered due to a decline in oil prices. There was a recession-driven slide in sales of new condominium apartments in 2015 and 2016, with unit sales falling below the level seen in 2011. In 2017 there was a slow recovery and unit sales grew for the first time since 2014.
What’s Next For Calgary New Apartment Sales?
According to a report by Altus Group, sales in the first half of 2018 are on par with sales of the first half of last year. This is a sign that unit sales are stabilizing. That said, there is still plenty of excess inventory available in Calgary. There were about 3,200 unsold units in active projects in Calgary at the end of the second quarter of this year, which represents about 18 months of supply. A year ago, when measured against the pace of sales over the last year, there were 14 months of inventory. This is up because more projects have been launched in 2018. About 1,000 of these unsold units are actually completed and ready to move in and they are providing competition to pre-construction units.
Altus expects sales in 2018 to be similar to levels seen in 2017 and for that trend to continue into 2019. Given the level of sales, they expect inventory to remain high which will limit developers’ abilities to raise prices.
Edmonton Market Update [New Condos]
There were about 1,600 unsold new condominium apartments in Edmonton at the end of Q1 2018 which represents 17 months of supply (again using the previous 12 months pace as a benchmark for measurement). Altus says this is historically high, but an improvement from Q1 2017 and 2016 where unsold inventory stood at 22 months and 30 months.
Similar to the Calgary market, approximately 30% of unsold units are completed and ready to move in. This provides plenty of competition for the 9 projects launched in 2017 which will bring about 1,100 units to market.
In terms of the overall Alberta market, the difficulty in gaining approval for the Trans Mountain Pipeline will continue to weigh on the economy since a new pipeline is seen as one of the best solutions to exporting the “heavy oil” found in Alberta which currently trades at a large discount to conventional oil. When we start to see sustained economic growth, job growth and population growth, we will likely see a rebound in Alberta real estate including new condominium apartment sales in its two biggest cities.
This article is based on commentary from the Altus Group Housing Report – June 2018 and the Edmonton Flash Report 2018.