Why Canadians aren’t buying cars, but they’re still buying condos

The Globe and Mail is reporting that Canadian car sales have dropped to the lowest levels in nearly five years, and a new survey shows that condo sales are growing.

A new survey released this week shows that Canadians are still buying homes, but are moving away from cars.

The survey of 2,400 Canadians found that in the first quarter of 2018, only 35 per cent of Canadians were buying cars while 39 per cent were moving away.

The average purchase price of a home in Canada dropped 3.4 per cent year-over-year to $1,965,000.

Sales of condos fell 3.6 per cent, while sales of houses jumped 6.4%.

“It’s still the case that the demand for condos is very high, and the supply of them is quite high,” said Michael Knaus, a senior vice president at BMO Capital Markets, which conducted the survey.

But, he added, the growth in condo sales is “not really reflected by the demand.”

“We’re seeing a real change in the Canadian housing market and condo demand has been quite flat,” said Knauss, who said the market is a little more vulnerable than it was last year because of a global economic downturn.

“But at the same time, you’re seeing the demand of condos going up.”

The latest BMO survey shows condo prices have risen for the second year in a row, but the market for homes is still a little less expensive than it once was.

In the second quarter, the average sale price of condos was $1.9 million, while the average purchase was $2.9-million.

A buyer can get as high as $1 million for a condominium, but Knaiss said condos are still a lot more expensive than homes.

“If you buy a home and then you live in a condo for six months, you are not going to be able to afford to buy a new home,” he said.

While condo sales may be shrinking, condo sales have been on the rise for the last year, and Knass said the number of condo buyers has grown since the election.

Sales rose 9.2 per cent to a record $9.85-billion in the second half of 2017, and condo prices rose 5.3 per cent.

“The trend is clearly in the condo market,” Knauses said.

He said the biggest risk to the condo-buying public in 2018 is the government’s policy of selling new condominiums at a profit, because condo sales tend to be more expensive because of the tax breaks that come with them.

Condo-building in Canada has been growing steadily since the mid-1990s, but condo sales still lag behind home building.

According to the Canadian Real Estate Association, the number and price of new condos in Canada increased by 15.5 per cent between 2009 and 2017.

A recent survey by Re/Max found that a majority of Canadians believe that a condo will become more popular as the housing market improves.

But the survey found that just over one-quarter of Canadians said they would buy a condo in the future, while 26 per cent said they wouldn’t.

The number of new condo units in Canada is expected to increase from 1,921,500 in 2017 to 2,831,100 in 2021.

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