Sales Jump 26% while Unsold Inventory Falls by 26%
Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q2-2016 market results today.
A total of 7,731 new condominium apartments were sold across the Greater Toronto Area during the second quarter of 2016, rising 26% year-over-year to reach the second highest level of quarterly activity on record behind Q2-2011 (8,548). Sales would have been even higher if supply kept pace with demand, as new project launches fell 9% from a year ago to 5,106 units. As a result, total unsold inventory in development plunged by 26% annually to 13,528 — the lowest level since 2010 and representing a decade-low 6.8 months of supply.
The average index selling price for new condo apartments continued to grow at a slow pace, rising 2% from a year ago to $582 psf. Price growth was stronger in the core where supply has become more strained, with sold index prices up 4% annually ($662 psf) and unsold prices rising 7% to $724 psf in the former City of Toronto. In the resale market, condo apartment prices grew 10% year-over-year to $498 psf.
“With demand for condos in the GTA pressing forward strongly, new projects are being challenged to enter the market in greater volume. Should current conditions persist, price pressures for high-rise units can be expected to build, particularly as low-rise housing remains afflicted by record-low supply” said Shaun Hildebrand, Urbanation’s Senior Vice President.
Demand Shifts to Larger Units
Urbanation examined the distribution of sales by unit type among the top 20 selling new condo apartment projects, which represented approximately half of all sales in the second quarter. The share of two- and three-bedroom sales increased to 44% in Q2-2016, up from a 35% share of sales held for these larger unit types among the top 20 selling projects a year ago in Q2-2015, and a 27% share five years ago during the market high in Q2-2011. While the share of three bedroom sales remained relatively minimal at 3%, the share of two bedroom without den sales increased to 29% (compared to 18% in Q2-2011), which occurred as the share of one bedroom plus den sales fell to 28% (from 39% in Q2-2011) and one bedroom without den sales declined to 25% (from 30% in five years ago).
Apartment Site Acquisitions Rise
In a sign that more supply is heading into the market in the future, Urbanation’s tracking of commercial property transactions revealed that apartment development site sales in the GTA reached 73 transactions during the first half of 2016, up from 47 acquisitions during the first half of 2015. The total value of apartment site sales increased by 13% annually in the first half to $971 million. More than 90% of the total value of sales was located in the City of Toronto ($904 million) and three quarters in the former City of Toronto ($730 million).