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High-rise condo prices could flatline in 2011

Metro Vancouver's condominiums are a key sector of the housing market - and a longtime investor target - but a leading consultant forecasts that sales will tumble and prices could slumber in 2011.
Metro Vancouver's condominiums are a key sector of the housing market - and a longtime investor target - but a leading consultant forecasts that sales will tumble and prices could slumber in 2011.

Frank Schliewinsky, president of Vancouver-based Strategics, said the average price per square foot of a Metro-area highrise condo sold through the multiple listing service (MLS) increased by just 1 per cent in 2010, and he expects a similar lackluster performance over the next 12 months.

Suburban markets will fare the worst, Schliewinsky said, predicting prices of resale condos in such areas as Coquitlam and North Vancouver could drop by up to 10 per cent by year end.

However, largely due to Asian demand, he sees a price increase of 5 per cent this year in the downtown area, the west side of Vancouver and in Richmond.

In a January report, Strategics said the average highrise condo price will remain stalled at $550 per square foot, with MLS sales falling 3 per cent across the region this year.

In the low-rise condo market, sales will remain flat and could fall by 10 per cent in suburban markets, from North and South Surrey to Coquitlam, Port Coquitlam and Port Moody, and by 11 per cent in East Vancouver, Strategics forecasts.

Prices of low-rise condos have already taken a hit, dropping from an average high of $386 per-square-foot in May 2010 to $349 in December.

"At the very best, 2011 may see an average price decline of 1 per cent," Schliewinsky said.

Sales of condo apartments reached 811 in December 2010, a decline of 29.7 per cent compared to December 2009, according to the Real Estate Board of Greater Vancouver. The Board said the price of a typical apartment property increased 1.2 per cent from December 2009 to $387,115. However, prices are down about 3 per cent from the peak in April 2010.

Schliewinsky noted that some variables could strengthen the market. "Depending on how interest rates and immigration from China plays out, there may not be a decline in sales at all this year, but a major increase in sales is not in the forecast."


from Western Investor, February 2011