Canada's Condominium Magazine
The condominium market saw an increase in construction over the past month or so. Condo and multi-unit buildings rose by 14 per cent from February to March, compared to a 7 per cent decline in single-family detached homes. Ontario showed the strongest growth with 102,838 new units, an increase of 26 per cent. Toronto was the record-setting city with a 78 per cent increase, which amounted to a record number of new developments.
“The story here is clearly not about lack of supply,” said Bank of Montreal chief economist Doug Porter, adding that it is more about supply composition. “Indeed, note that Toronto starts jumped to the highest since at least 1990, but all of the gain was in condos.
Statistics Canada reported a 5.6 per cent rise in the value of building permits issued by municipalities in January, compared to a month earlier, a result of a 71 per cent increase in permits for multi-family homes in Ontario, those of which include condominiums and apartments.
The majority of new condo developments focused on urban areas, though trends have shown a strong shift toward suburban areas. According to Shaun Hildebrand, Senior Vice President of Urbanation, new, pre-sold condos in the suburban 905 region surpassed 13,000 in 2017, up 54 per cent from 2016.
“Most of the new condo sales that occurred over the last year and a half are in projects that haven’t even broken ground yet,” he said. “So this is just the beginning of what’s going to be a very strong run up in construction starts over the next couple years.”
In Urbanation’s fourth quarter report for 2017, the company estimated that nearly 10,000 more units would be finished in 2018. “The level of activity underway is putting the industry under tremendous pressure to push the units through the development cycle,” said Hildebrand.
Housing starts across the country were trending at 225,276 in February, compared to 224,572 in January. “The national trend in housing starts has been very stable since November 2017,” said Bob Dugan, chief economist for the Canada Mortgage and Housing Corporation (CMHC). “Multi-unit starts have trended higher in recent months in most major urban centres, while single, detached starts have trended lower.”
Rising prices have weighed heavily on recent trends, increasing demand for new developments while also driving people out of the Greater Toronto Area and into other places such as Oshawa. Figures from CMHC showed that Oshawa hit an 11-month high for single-family detached home starts in February, while construction of multi-units slowed.
Construction in British Columbia dropped 26 per cent in February, following strong starts in Vancouver in January. Rental apartment construction in Montreal has also continued to surge, resulting in approximately 1,400 new units thus far in 2018, approximately three times that which had begun at the same time in 2017.
Despite buyer migration to other markets, condo demand in Toronto remains strong. As far as what the market has in store going forward, analysts are divided. Some experts say the market will likely crash, while others insist that more of a soft landing lies ahead.
“We’ll see how much tempered speculative demand and rising interest rates soften activity later in the year, but recent policy measures have largely hit higher-end prices, while underlying demand for units, especially in the mid-range of the market, remains strong,” said Robert Kavcic, senior economist at BMO Capital Markets.