EXECUTIVE SUMMARY
The combination of favorable interest rates, successful rollout of TOA policies, and strategic market activity sets a strong foundation for continued growth in Vancouver’s development land sector. Developers are well-positioned to capitalize on demand for transit-oriented housing, leveraging policy stability and accessible borrowing conditions to advance key projects. While the potential for new U.S. trade policies introduces a degree of uncertainty, Vancouver’s strong market fundamentals continue to support an optimistic outlook for 2025.
–THOMAS TROWBRIDGE, Personal Real Estate Corporation & Vice President
INTEREST RATES
The Bank of Canada cut its key interest rate by 50 bps for a second consecutive decision in its December 2024 meeting bringing the policy rate to 3.25%. Rhetoric from policymakers from the central bank suggested that there will not be any more aggressive rate cuts in 2025, and officials dropped the statement that borrowing costs are due to be lowered should their base case hold.
INFLATION
Inflation has fallen considerably over the past 18 months, in part because higher interest rates have forced some households and businesses to curb their spending. The inflation rate (as of December 17, 2024) sits at 1.9% the lowest annual inflation rate since March, 2021. Today, the cost of shelter is the single biggest driver of inflation.
BOND MARKET
“The interest rate environment in Canada may continue to offer an attractive risk/return profile for investors in government bonds into 2025.” Financial markets initially reacted to Donald Trump’s U.S. presidential election victory with risk assets (equities and cryptocurrency) responding positively and with U.S. bonds being sold off. That being said, government bond yields across the curve, in both Canada and the U.S., are at levels near their highest in the past 20 years.
GDP
The real measuring stick of a country’s economy,” says economist Lars Osberg, “is real GDP per capita, an economy’s production per person.” Canada’s real GDP per capita in the third quarter declined for the sixth consecutive quarter, falling by 0.4 per cent. “In terms of GDP per capita, we’ve been in a recession for some time now and the increase in the unemployment rate reflects that,” Osberg said.
THE REAL ESTATE MARKET
Commercial transaction volumes in the Lower Mainland fell significantly in the aftermath of the June 25 deadline to increase the capital gains inclusion rate, as many deals that would have transacted in the third quarter were pulled forward into the second quarter.
Land: There were 64 commercial land sales in Q3 2024, which is a 33.3 per cent decrease from the 96 land sales in Q3 2023. The dollar value of land sales was $736 million in Q3 2024, a 12.6 per cent decrease from $842 million in Q3 2023.
