Canada's Condominium Magazine
The president of the Toronto Real Estate Board has once again called on all three levels of government to turn their attention to the supply of homes for sale in the Toronto area in order to bring the market back into balance and moderate price growth. Larry Cerqua wants governments to revisit existing land-use designations in built-up areas, streamline development approvals and look for ways to incentivize landowners to develop their land.
The call for action comes in the monthly summary of home sales and prices in the GTA. In February, sales in the resale market were up 5.7 per cent compared to a year ago. The average selling price of a home rose 27.7 per cent year-over-year, reaching $875,983. A detached home in Toronto now costs an average $1.57 million. A semi-detached costs just over $1 million in the 416.
In 2017, policymakers at all three levels of government must turn their attention to the supply of homes available for sale. They should consider revisiting land-use designations in built-up areas to allow for a greater diversity of home types, streamlining development approvals and permitting processes, and looking at ways to incentivize landowners to develop their land.
The inherently contradictory dynamic of fewer new listings pursued by more buyers continued in February. Listings were down 12.5 per cent compared to a year ago, causing a contraction of available inventory. According to TREB, there was one month’s inventory available in February, less in some neighbourhoods.
The listing crunch is “undoubtedly” responsible for the sustained double-digit price increases in both high-rise and low-rise market segments, said TREB analyst Jason Mercer, adding that government policy to date, which has targeted only the demand side of the market by tightening mortgage lending regulations, will not be enough to bring balance into the market.
Condominiums accounted for 2,360 of the total 8,014 home sales in the month. The average price of a resale condo in Toronto was up 18.2 per cent compared to February 2016, selling for $515,424. In the 905 area the gain was even greater, with prices rising 23.6 per cent, to an average of $404,460.
Despite the high prices and scarce supply that trouble local homebuyers, international observers see the real estate market in Toronto from a different perspective. The latest Knight Frank Global Cities report says that Toronto’s rapid commercial real estate development has been a direct result of business growth and “stable economic climate,” in which attractive market returns are driven by competitive interest rates, a highly educated workforce, and low taxes on new business investment.
As for the residential real estate market, Toronto is now ranked sixth in the world on London-based real estate consultancy Knight Frank’s luxury index, which measures cities’ luxury home markets based on how much prices have risen over the past year. In Toronto, the increase in the top end market was 15.1 per cent, the highest in North America. The average price gain in the 100 world cities measured was 1.4 per cent in 2016. Luxury prices in Toronto have risen on the back of “basic market fundamentals” according to a Knight Frank spokesperson who spoke to BuzzBuzzNews, who also said that Toronto prices are competitive compared to other world cities.
In fact, Toronto is considered a bargain by world standards. The president of CBRE Canada, Mark Renzoni, told the Toronto Star that Toronto’s home prices in general are in line with cities like New York and Hong Kong, while condominium prices here are “significantly lower, discount lower” than in New York or London.