Canada's Condominium Magazine
Only 9 percent of homes sold last month were low-rise single-family homes, leaving high-rise condominiums to dominate the market at 91 percent of all June 2017 sales. Not only is the share of sales higher, the 89 percent year-over-year increase in sales is a higher-than-expected growth number — especially with worries over Ontario’s Fair Housing Plan. It’s actually a new record.
“We continue to see that the Province’s fair housing plan in effect since April has had little impact on the new home market,” said BILD President and CEO Bryan Tuckey.
Condo sales 6,046 in June
New condo sales of 6,046 for this reporting period of June 2017 are 89 percent higher than June of a year ago. The previous record for high sales was in March of 2017, totalling 5,495 units sold. The ten year average for condo sales per month is 2,550 units.
By comparison, in June 2017, only 551 new single-family low-rise homes sold — a 72 percent drop over last year and 64 percent below the 10-year average.
By region, the increases are clearly focused in the major centres, with Toronto at ten times the 2016 numbers for June. Only Halton and Durham, further away from the city centre, saw drops (although the change was insignificant in terms of numbers):
- Toronto 2,610 units in 2017 significantly up from 222 in 2016 and 228 in 2015
- York 2,266 units in 2017 significantly up from 222 in 2016 and 228 in 2015
- GTA 5,495 total units in 2017 dramatically up from 2,910 in 2016 and 2,840 in 2015
- Peel 523 in 2017 up from 468 in 2016 versus 91 in 2015
- Halton 71 in 2017 down from 236 in 2016 and 119 in 2015
- Durham 25 in 2017 down from 38 in 2016 and 36 in 2015.
By comparison, in the last reported quarter by TREB, resales of condominium apartments, were stable, only slightly down. [See our previous story>>]
Never-the-less, BILD President and CEO Bryan Tuckey made the comparison — a fair one — comparing dramatically up for new condos, versus slightly down for resales:
“Unlike the resale market which experienced a slow down last month, the numbers reflected in the new homes market are quite different. Prices continue to rise and supply continues to be low. Three out of four of the new homes purchased in the GTA so far this year have been condo apartments. With condo prices continuing to escalate, this segment of the market is becoming out of reach for many consumers.”
Factors contributing to growth
The lead in the research, Atlus Group, attributed the high availability in May and June and adjusted expectations with consumers priced out of other options as factors in the growth. According to Patricia Arsenault, Atlus Group’s Executive Vice-President of Research Consulting Services:
“These factors include: the sizeable number of units in new condo projects opened in May and June (over 8,500); demand from end-user buyers who might have preferred a single-family home but have adjusted their expectations due to lack of affordable supply; and heightened investor interest due to the rapid price increases for condo apartments in recent months.”
Pricing rises: average $742 per square foot
With the shift of consumer preferences, new condos increased by an average of $22,000 in June over May of 2017. Average price for condominium high rise came in at $627,000, which represents a 34 percent rise over the previous year, with the average unit size of 845 square feet.
This makes the price per square foot average $742, 34 percent up from the same period of last year at $587. Given increased demand and preference, and the growth of Toronto and GTA as markets, this price can only continue to rise per square foot.
The average price for June was $627,000 in June 2017.
With inventory down nearly 20 percent, there likely will be continuing upwards pressure on pricing. In June, high-rise inventory dropped to 8,661.
“The ongoing drop in new housing inventory demonstrates how hard it is for the industry to bring new homes to the market,” Tuckey adds. “The challenges builders face including lack of serviced and permit ready developable land and out of date zoning bylaws continue to impact the supply of housing. It’s time for governments to work with the industry in order to help bring supply in builder inventories to a healthy level.”