The investor demand for multi-family homes in Metro Vancouver appears to have surged after the recent lending-rate cuts, according to Western Investor.
The sudden interest in apartment buildings came amid the growing concerns about the potential impacts of the COVID-19 outbreak on the economy, said Mark Goodman, a principal at Goodman Commercial.
"Interest rates are dropping with no end in sight, which is fuelling the real estate market," he said in a report in Western Investor.
In an unexpected move, the Bank of Canada (BoC) has announced emergency changes to the monetary policy, lowering its target for the overnight rate by 50 basis points to 0.75%. This was the first time the BoC made an unscheduled rate decision since the financial crisis in 2009.
Since the BoC’s announcement, several banks have already announced discounts to their lending rates, allowing for a “sudden surge” in demand for apartments, said Goodman.
Also read: Will COVID-19 dampen buying activity?
However, investors are more interested in large investment offerings that include development sites than in old rental buildings.
"This is counter to the weeks prior, when we were hearing that developers were done with Vancouver because of bad policies discouraging rental development," Goodman said.
Recent figures from the Real Estate Board of Greater Vancouver (REBGV) showed that the sales for attached homes increased on an annual basis, up by 45.8% to 404. Homes in this segment had a benchmark price of $785,000 in February, which was a 0.6% increase from last year.
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