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Demand for condos "well supported" by economy, population: report

Alto at Atria from Tridel (rendering). Remaining suites begin at $318,500 and are selling fast. Latest to sell out is the 2B.

A new report on the state of the condominium market in eight of Canada’s largest cities concludes that a growing population, as well as increasing interest by first-time buyers and retirees, will provide “vital demographic support” for the condo market in all eight cities for the remainder of 2012 and 2013.

The report, the Metropolitan Condo Outlook: Summer 2012, is the work of mortgage insurer Genworth Canada and the Conference Board of Canada. It shows that while conditions vary somewhat across the country—GDP growth will be 3.5 per cent in Calgary but just 1.6 per cent in Ottawa—and the market is “stalked by twin fears” of over-spending homebuyers getting in over their heads and being unable to pay their debts when interest rates inevitably rise, the market is not in distress.

Economic conditions are “decent,” with GDP advancing in all eight cities. Toronto can expect to see a balanced market, with only a slight increase (1.3 per cent) in the median condominium price. That median price will decline, however, in Vancouver, Victoria and Edmonton.

Condo construction in Toronto

As for new construction and absorption of inventory, the report sees little that’s problematic there, with rising “new unit take-up” predicted in Toronto and inventories of unoccupied units “well below” those of the early 1990s. Those Toronto inventories are expected “to ease” in 2013.

Continuing population growth, with Toronto receiving, on average, about 100,000 new residents each year, will mitigate any “damage” that might result from over-supply of new condo units. The report forecasts a dip of 2.2 per cent in new starts this year, a larger drop in 2013, and then “modest” growth  of 1.9 per cent per year thereafter.

The report forecasts that the median cost of resale condominiums will rise 2.5 per cent next year, and 3.5 per cent the following two years.The median price for a Toronto condo (resale) for 2012 in this report is $304,755.

 

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