Record-shattering sales of rental apartment buildings have slowed in Metro Vancouver, but analysts say the slowdown could be more a sign of fewer properties available than of flagging demand.
Apartment building sales, which are included in the B.C. foreign-buyer tax introduced in August 2016, totalled 89 transactions in 2016’s first half in Metro Vancouver but fell to 51 sales in the second half. The total dollar volume dropped 54% to just over $300 million, compared with the first six months of the year, industry studies show.
For all of 2016, sales of rental apartment buildings across the Lower Mainland tallied $1.1 billion, according to the Real Estate Board of Greater Vancouver, which was down 18.2% from the record pace of a year earlier.
However, a Colliers International study suggests that a lack of supply was the main cause of the sales decline.
“Although overall supply diminished, significant demand was still evident as price-per-unit values for every sub-market in Metro Vancouver increased by 6% to 35%, with an average increase of 26% for Metro Vancouver,” Colliers reports.
According to the Colliers’ survey, the average price per rental apartment spiked 35% in the Tri-Cities region to an average of $228,164 and increased 30% in Burnaby to $272,279 compared with 2015.
In Vancouver, which accounted for 64% of all sales in 2016, the average per-suite price increased 19% from a year earlier to $405,108.
Values of North Vancouver apartment buildings have also grown exponentially, as per-unit values had increased 24% from 2015 and more than 50% since 2014, Colliers reports.
However, some prices are dropping as sales soften. On March 21, HQ Commercial’s Goodman team dropped $800,000 off the listing price of a 10-suite apartment building on Hudson Street in Vancouver’s Marpole neighbourhood. The 11-year-old building is now listed at $4.2 million, or $420,000 per rental suite.