The Evolving Nature Of Housing In Victoria
Posted by John Vernon & Associates on
The scale of residential building construction underway around the Capital Regional District (CRD) these days is striking. This is most evident in the downtown core of Victoria where there seems to be a new high-rise under construction in virtually every block. In the suburbs, there are numerous single family and multi-family developments in progress. The CRD hasn’t witnessed this pace of development for over a decade.
2017 marks the first time that the percentage of sales of “strata” properties (i.e., strata duplexes, townhouses and condominiums), surpassed sales of Detached Single Family Dwellings (DSFDs). There are two discernable trends. First, sales of DSFDs have fallen from 63.3% in 1997 to 49.2% in 2017 y-t-d. Second, sales of condos have risen from 22.3% in 1997 to 36.1% in 2017 y-t-d. The percentage of sales of strata duplexes and townhouses has shown little change over time. A significant factor underlying these trends is an economic one. The average sale price of DSFDs in greater Victoria in 2017 y-t-d was $874,991. This figure is beyond the reach of many buyers. It compares to average sale prices of $579,339 for a strata duplex, $538,924 for a townhouse and $414,731 for a condo. A major reason for this price differential is the value of “land” in the CRD. Assessment data reveals that, on average, some 66% of the value of DSFDs is the “land”. “Improvements” (i.e. buildings) constitute only 34% of the value of the property.
Demographics is also an important factor. One of the long term trends in Canadian society has been the decrease in household size. In Victoria, a full 70% of the 162,715 private dwellings consist of one or two person households. Furthermore, 2016 census figures for Victoria indicate that “millennials” constitute some 20% of the population. In many instances, strata properties are the entry-level home of choice of millennials for either life-style and/or affordability reasons. At the other end of the age spectrum are seniors. Persons over 65 years of age constitute 21% of the population of Victoria, and strata properties appeal to those looking to downsize and/or the convenience of condo ownership. These two age cohorts are important drivers of the Victoria real estate market.
Finally, public policy initiatives in the CRD are promoting increased densification which, in turn, supports the development of strata properties.