Priced out of detached houses and other low-rise products, Toronto buyers poured into condominiums units last year to create a 10-year low in inventory, according to a report out Wednesday.
Urbanation Inc., which has been following the high-rise market in the Greater Toronto Area since 1981, said unsold inventory in the market at the end of 2016 was 9,932 units, a 47 per cent decline from 2015. Based on the present pace of sales, that equates to about 4.4 months of supply — well below the 10 months of supply needed for a balanced market.
The research firm said 27,217 new condo apartment units sold across the GTA in 2016, a 34 per cent increase from 2015 and enough to break the record set in 2011. Urbanation said the record was set with fewer new pre-construction launches — there were 18,466 in 2016 versus 28,204 in 2011 — but the lack of new buildings and strength of demand helped push the unsold inventory levels down.
Urbanation is now predicting the lack of inventory in the high-rise market will lead to slowdown in sales and is forecasting only 23,000 new condo apartment sales in 2017. The firm expects developers will respond to market conditions by launching more projects in 2017.
‘The new condo market is experiencing broad-based demand that will carry forward in 2017,” said Shaun Hildebrand, senior vice-president of Urbanation. “Buyers, priced out of the low-rise segment, a surge in rental demand and increased attention from investors are placing downward pressure on condo inventories which will support strong price growth this year.”
The overall index price for sold units in active development jumped three per cent in the fourth quarter from a year ago to $586 per square foot. In the former city of Toronto, the average selling price within projects launched in 2016 jumped 14 per cent compared to projects in 2015 to an average of $746 per square foot. At the end of 2016, the average remaining inventory in the old city of Toronto was $795 per square foot.