Available Supply Drops to Decade Low
TORONTO – October 27, 2016: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q3-2016 market results today.
A total of 6,677 new condominium apartments were sold across the Greater Toronto Area in Q3-2016, soaring 73% year-over-year to reach the highest level of third quarter activity on record. Sales were 58% higher than the 10-year average for Q3 periods and 12% higher than the previous high set in Q3-2007. Total unsold inventory in development plunged by 33% from a year ago to 11,485 — the lowest level since the first quarter of 2007 and representing a record low 5.2 months of supply.
The average index selling price for new condo apartments continued to edge higher, rising 2% from a year ago to $590 psf. GTA-level price growth has been weighed down by a shift in new development activity to areas outside of the core. Within the former City of Toronto, average index selling prices grew by 5% year-over-year to $674 psf, while asking prices for unsold units, which dropped in number by 48% annually to an all-time low, increased by 12% from a year ago to $759 psf. Price trends for new condos are beginning to follow the resale market, where average index prices grew 12% from last year to $511 psf ($667 psf within the former City of Toronto).
“The pace of new condo development has fallen well below the level of demand this year. Given the low prevailing amount of available supply and diverse range of buyers, the recent mortgage insurance rule changes are anticipated to have a somewhat limited effect on market conditions for condos in the near term” said Shaun Hildebrand, Urbanation’s Senior Vice President.
Lack of Supply and Shift in Demand
In the year-to-date to September, a total of 19,917 new condominium apartments were sold across the GTA. Over the same period, only 12,189 new units opened for pre-sales, marking the widest divergence between sales and new supply on record. In total, 90% of the 111,207 units in development were pre-sold as of Q3-2016, with 80% of the 30,426 units in pre-construction already pre-sold, jumping from a 64% share last year. Among the new units that opened for pre-sales during the third quarter, 63% were sold by the end of September — one of the highest opening quarter absorption rates on record.
In a sign that demand among end-user buyers has been increasing in the new condo apartment, the quarterly absorption rate of remaining supply within existing projects launched in previous quarters (where owner-occupant purchasers tend to be more active) soared to a record high of 29% — double its 10-year average of 14%. Furthermore, sales of more expensive condo units have also been growing quickly in the resale market, with year-to-date activity up 62% annually among units selling for more than $600,000.