What Might Happen with New Condo Prices?
Private investors are bidding up land prices and pushing out residential developers in Metro Vancouver. Higher land prices will feed through into higher new home prices. Worse yet, private investors display a tendency to hold on to land, rather than develop, which should put further pressure on prices in a region already dealing with affordability issues
A recent report from Colliers on residential land price in Metro Vancouver shows steady growth in residential land prices. These land prices will likely translate into higher new home prices per square foot in the not too distant future.
Kirk Kuester, executive managing director of Colliers, points to “aggressive private investors” that are pushing up land prices, according to an interview with BIV. Investors that are “willing to buy land and hold it, sometimes for years”
Land prices make up around a third of the cost of a new condo in Vancouver and range as high as $220 per buildable sq. ft. (on average)
- The price of high-density residential land in downtown Vancouver is around $225 per sq. ft., on average
- Prices east of downtown and in Chinatown are notably less, falling to around $130 per sq. ft.
- Prices are high around the Cambie corridor, driven by the close proximity to higher-order transit. A fact that is corroborated by recent research from Altus Group
- The price of land per buildable sq. ft. is by far the lowest in Surrey’s City Centre area (of the areas examined here), allowing for notably cheaper new apartment units.
Typically, developers look to develop new land acquisition within 2-3 years. This means that if land prices begin to rise today, you can expect to see an increase in new apartment prices within a short time.