{"id":11351,"date":"2019-01-10T10:10:46","date_gmt":"2019-01-10T18:10:46","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11351"},"modified":"2019-01-02T15:14:20","modified_gmt":"2019-01-02T23:14:20","slug":"rising-construction-costs-slowing-market-set-stage-for-2019","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/01\/rising-construction-costs-slowing-market-set-stage-for-2019\/","title":{"rendered":"Rising Construction Costs &#038; Slowing Market Set Stage for 2019"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Reality check<\/strong><\/p>\n<p style=\"text-align: justify;\">By the time you read this, most property owners will know what the BC Assessment Authority thinks their property is worth \u2013 or was worth, as of the valuation date of July 1, 2018. However, interest rate hikes, government policies and other factors have helped keep prices in check in recent months.<\/p>\n<p style=\"text-align: justify;\">The benchmark price for residential properties handled by the Real Estate Board of Greater Vancouver fell from $1,093,600 at the end of June to $1,042,100 at the end of November, a 4.7% drop. Assuming even a modest decrease in December, the benchmark will be down more than 5% in the latter half of the year.<\/p>\n<p style=\"text-align: justify;\">While the BC Real Estate Association (BCREA) remarked in August that \u201cthe downturn in housing demand induced by the mortgage stress test is now largely behind us,\u201d it had changed its tune by early November. RBC Economics followed in December, reporting that the effect of higher qualification requirements and interest rate hikes continues to be felt.<\/p>\n<p style=\"text-align: justify;\">\u201cMarket dreariness is here to stay for a while,\u201d it dourly observed. \u201cWe expect low temperatures to persist over the coming year as rising interest rates, the mortgage stress test, market-cooling measures in B.C. and stretched affordability continue to exert significant restraint on homebuyer demand.\u201d<\/p>\n<p style=\"text-align: justify;\">The outlook prompted BCREA to forecast a 2.9% increase in average pricing in 2019, on the back of a 1.8% increase in 2018.<\/p>\n<p style=\"text-align: justify;\">\u201cDespite the mortgage policy drag on the sector, strong performance of the B.C. economy continues to be highly supportive of housing demand,\u201d remarked BCREA chief economist Cameron Muir, projecting an average price of $1,080,000 for 2019 \u2013 exactly where he expected prices to land in 2018.<\/p>\n<p style=\"text-align: justify;\"><strong>We all pay<\/strong><\/p>\n<p style=\"text-align: justify;\">Do you know how much tax you\u2019ll pay based on the assessment you received this week?<\/p>\n<p style=\"text-align: justify;\">On the one hand, a host of new taxes from the province is set to boost what the most expensive properties pay. Moreover, we\u2019ll all have to tell the province whether or not we\u2019re resident in our homes if we\u2019re in one of the regions subject to the vacant-home and speculation tax.<\/p>\n<p style=\"text-align: justify;\">Vancouver, meanwhile, has asked the province to exempt it from the surcharge on properties worth $3 million and up \u2013 but with some of the province\u2019s most expensive residences within its boundaries, that seems unlikely. Moreover, taxing residential properties isn\u2019t really the issue for Vancouver councillors, who approved a 4.9% increase in property taxes last month to cover rising expenses. (More than a third of the increase was to pay for the province\u2019s employer health tax \u2013 a case of taxing Peter to pay Carole.)<\/p>\n<p style=\"text-align: justify;\">But the increase will really bite non-residential property owners, who pay 3.8 times the residential rate. This is an improvement from a ratio of 4.9 in 2008 but could rise when rates are finalized in May. Business properties bear a disproportionate share of the tax burden because their numbers aren\u2019t increasing as quickly as residential units. In short, there\u2019s relatively fewer of them to foot the business share of the bill.<\/p>\n<p style=\"text-align: justify;\">With activity cooling and asset prices set to moderate, higher taxes aren\u2019t likely to sit well with property owners. Sure, property values have risen in recent years, but now carrying costs are rising, too. Creating affordable housing might have been the challenge of the last government; finding a fair means of financing the ambitions will challenge the current administration.<\/p>\n<p style=\"text-align: justify;\"><strong>Paying more<\/strong><\/p>\n<p style=\"text-align: justify;\">Construction cost increases are projected to average 6% to 8% in 2019, according to BTY Group\u2019s annual Market Intelligence Report.<\/p>\n<p style=\"text-align: justify;\">While regional variations will exist, with projects closer to the core of Metro Vancouver seeing higher prices, all signs point to slower increases than a year ago.<\/p>\n<p style=\"text-align: justify;\">\u201cThe rate of increases seems to have declined through 2018,\u201d said Neill McGowan, a quantity surveyor and partner with the consulting firm.<\/p>\n<p style=\"text-align: justify;\">Many general contractors having a full book of activity through 2019, however, means significant increases are still possible thanks in large measure to competition for workers. Some contractors are marking up jobs 20% and 30% to ensure they can command the labour needed to get the work done. \u2022<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2019\/01\/rising-construction-costs-slowing-market-set-stage-2019\">Rising Construction Costs &amp; Slowing Market Set Stage for 2019<\/a> by Peter Mitham | Business in Vancouver<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reality check By the time you read this, most property owners will know what the BC Assessment Authority thinks their property is worth \u2013 or was worth, as of the &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/01\/rising-construction-costs-slowing-market-set-stage-for-2019\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11351","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Rising Construction Costs &amp; 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