2018 a ‘year of change’ in Canada’s new housing industry: Altus

IMAGE: The Toronto housing market. (Google Street View image) It was not a smooth year for new home markets in Canada in 2018, though Altus Group is generally positive for the housing sector heading in 2019.

Altus’s New Home Outlook 2019 report cites tighter mortgage regulations, higher interest rates, new taxes and increased development charges combining to make 2018 a challenging time for the real estate industry. It says demand was impacted in the major markets, most significantly in the single-family and higher-end townhouse segments.

New condominium apartment sales also moderated in Vancouver and Toronto, where the incredibly strong demand seen in 2017 softened.

“Across the country, 2018 was a year of change within the new housing housing,” said Matthew Boukall, the vice-president of product management, data solutions at Altus Group. “We saw the full-year impact of the mortgage rule changes.”

In Canada’s two largest cities, other government initiatives continued to impact the markets. In Vancouver that included the foreign buyer’s tax; in Toronto new rent controls had an impact, though they were later rescinded after a new Conservative government took power.

“The market in our two largest markets cooled. When you get outside of those markets, we saw two different directions in Calgary and Edmonton. Edmonton had a year that was a little bit more correcting, whereas Calgary saw some stability come into the new housing market, specifically in the apartment sector. Montreal had another strong year and Montreal really was the bright spot in terms of apartment activity across the country.”

The report says the supply of available new homes in both Toronto and Vancouver was constrained at the start of 2018, particularly in the condo apartment sector. It said the lack of available product contributed to the rapid rise in pricing in 2017 and impacted sales volume at the start of 2018.

In Q3 2018, new condo apartment sales were down 19 per cent year-over-year in Vancouver and 49 per cent in the GTA. In other major markets, Montreal was up 31 per cent; Edmonton saw sales fall by 48 per cent; Calgary sales rose by one per cent; Kitchener-Waterloo was up by 69 per cent; and Hamilton had an increase of 19 per cent.

2019 outlook

Altus Group predicts a positive outlook for housing demand this year due to several factors – increased immigration, demand from first-time buyers, low rental vacancy rates, and high rental rates.

However, high interest rates will continue to impact affordability, as will rising construction costs and development charges. Also, some regions of Canada will have challenges with weaker economies which will impact demand.

“Across the major markets in Canada, Altus Group believes the markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019 given the depth of the decline in 2018 and building off of the sales recovery noted in the back half of 2018,” says the report.

“Calgary and Edmonton will continue to be impacted by the weaker economy, but are not forecast to experience a material decline in overall sales volumes given the current levels of activity in each market.

“The two markets that may see a decline in sales activity in 2019 are Montreal and Vancouver – but for very different reasons. Montreal had a tremendous sales year in 2018 and 2019 volumes are expected to decline as the market returns to more normal conditions.

“The Vancouver market, which is currently exhibiting the most potential for downside risk, is expected to see a modest decline in sales volumes as consumers react to higher borrowing costs and developers react to escalating construction costs in the face of lower revenue opportunities.

“With that said, the sales volumes in 2019 is still anticipated to be at or close to the 10-year sales average for the market.”

Boukall noted demand remains high in both of Canada’s key driver markets: “We still anticipate that Toronto and Vancouver have very strong housing demand if there’s affordable products in that market to buy.”

Following are breakdowns of conditions in six of Canada’s major urban markets:


Toronto started the year very tight on the supply side, and developers also faced challenges from new and higher development charges, said Boukall.

“The development industry and builders in general didn’t bring as much product to the market at the start of the year. When they did start to bring the product, sales were off in terms of the frenzied pace,” he said.

The GTA market came off a record year for new condominium apartment sales in 2017. While sales have been lower though, pricing for new condominium apartment product in the downtown area has remained fairly stable. Overall, average prices have trended toward $800,000, says the report.


Heading into 2018, Vancouver was the tightest of the markets examined in terms of available new homes with less than two months of inventory. New project launches, particularly along transit lines and in the Fraser Valley, have added much-needed product and boosted the supply to 3.3 months of inventory – still the lowest in the country.

“The frenzied pace in the market has softened with the sales rate at launch moderating, while price growth has stopped and even pulled back in certain segments of the market. A key challenge that has become more apparent as of late has been the price sensitivity of consumers, with higher-priced projects, or those priced above the competition, experiencing below average sales rates,” says the report.

Boukall said consumers were impacted by the rising interest rates and stricter mortgage regulations. Foreign investment has also declined.

“One of the challenges Vancouver has is housing affordability. So when we talk about some price sensitivity, it’s customers choosing sectors of the market and projects that generally are considered affordable for Vancouver,” he said.


Montreal has seen strong increases in new home sales during the past three years and continues to experience robust demand for new condominium apartment homes.

“Part of that is because there’s more opportunities to buy. There’s more development happening. There’s more projects being launched,” said Boukall. “The one advantage Montreal has, when you compare it to Toronto or Vancouver, it is still quite affordable. They have more affordable opportunities.

“They have strong immigration, strong economic growth. It’s kind of building for a number of years. 2018 was a great year in the overall economy in Montreal and the housing market was a key beneficiary of that.”


Edmonton has been facing challenges from elevated inventory levels, a large stock of completed and unsold new homes, and the impact of continued weak energy prices on housing demand.

“Consumers’ mortgage qualification has become a more significant challenge for new home projects, resulting in a year-over-year decline in sales levels by almost 50 per cent for both townhouse and condominium apartment product,” says the report. “The slow pace of sales has also meant that several projects have shifted to purpose-built rental.

“While the market has been slow, there are some bright spots with development in the ICE District experiencing reasonably strong demand, along with well-priced townhouse developments in the suburban markets.”


The Calgary market performed stronger  in the first nine months of  2018, with increased sales of both new condominium apartment and townhouse product on a year-over-year basis.

“This growth has been exclusively in the suburban markets where new condominium apartment and townhouse sales have exceeded 2017 numbers,” the report states.

“While sales in the suburbs are tracking higher, the inner city and downtown markets are seeing weaker demand and lower sales volumes with higher office vacancy and lower downtown employment impacting housing demand near the core. Conversely, the strongest new home sales in the suburbs have been occurring in regions near employment centres.”

Hamilton / Kitchener-Waterloo

Hamilton and Kitchener-Waterloo have benefited from relative affordability compared to real estate in the neighbouring GTA.

The report says promised improvements to transit, which will take several years to implement, will enhance commuting options throughout the Greater Golden Horseshoe, thus providing greater opportunities to live in markets outside of the GTA.

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime,…

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Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime,…

Read more

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