Canada's Condominium Magazine
Prices for condominiums rose a striking 22.7% year-over-year, from an average $415,894 to $510,206. This is despite a drop in sales for the same third quarter period. What’s driving the increases? Rents are also up for condos.
According to Jason Mercer, TREB’s Director of Market Analysis:
“Condominium apartments will likely account for a greater share of home sales as we move forward. Consumer polling undertaken for TREB by Ipsos in the spring pointed to increased buying intentions for condominium apartments. With this in mind, it is not surprising that we have continued to see robust price growth, as demand has remained strong relative to available listings.”
Condo.ca has consistently reported the growing preference for condominiums over other housing types and the impact of short supply against demand. [See our previous story “More than 1/3 of home-buyers…”>>]
Preference for condo also driving rentals
Whether for sale or rental, demand for condominiums is high in the GTA, not only due to relative affordability (compared to other home styles) but for urban lifestyle. In rentals, although rentals are down for the quarter (see top right) at 5,784 in 2017, versus 7,991 for 2016, this is largely due to short supply. While, in Toronto core, 34.7% of rentals apartments are condos, the vacancy rate is only 1% — making it a landlords market.
Although the numbers only reflect sales and prices in the TREB MLS system, they are highly significant. Clearly, both for condo home sales, and condo rentals, inventory and new supply are the key issues. Even with developers stepping up with new projects, anticipated population growth and demographic shifts will keep supply tight.
According to Tim Syrianos, Toronto Real Estate Board President:
“The condominium apartment market segment has exhibited the strongest average rates of price growth since the spring, relative to other major market segments. Competition between buyers remains strong, as listings remain below last year’s very constrained levels.”
He continued: “Over the past few months, TREB has participated in discussions at various levels of government pointed at developing solutions for the housing supply issue in the GTA. As these discussions continue, it will be important to remember that the condominium apartment market is not immune to a listings shortage.”
New mortgage rules will likely solidify condo popularity
With stricter new mortgage guidelines anticipated in the new OSFI Guideline B-20, condo demand (both for sale or rent) will increase. The new rules likely will dramatically reduce buying power by up to 25% — making detached homes out of reach for average Torontonians. Demand for condo sales will increase as they become the most affordable type. Likewise, condo rental demand will increase as potential home-owners put their plans temporarily on hold.
“TREB will also be paying close attention to the potential impacts of the new OSFI Guideline B- 20 concerning new mortgage rules and underwriting standards, and the possibility of a vacancy tax in the City of Toronto. We will be asking consumers about their opinion on these initiatives, from the prospective of buying and selling intentions, during our fall polling cycle,” continued Mr. Syrianos.
Detailed data from TREB for the third quarter by city-centre