A More Cautious Approach Likely in Second Half of 2017
TORONTO – August 01, 2017: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q2-2017 market results today.
New Condo Market Continues Surging as Resale Market Moderates
A total of 12,138 new condo apartments were sold across the Greater Toronto Area in Q2-2017, setting a second consecutive quarterly record and rising 62% year-over-year. The 21,968 units sold during the first six months of 2017 surpassed 12-month levels averaged over the past 10 years (19,997 units). The latest 12-month total of 35,954 sales was 36% higher than the previous peak reached in Q1-2012 at 26,421 sales.
Demand continued to outpace supply as 11,849 new pre-construction units in 41 projects were brought to market in Q2-2017, which broke the previous record for new launches set in Q2-2011 (9,182 units). Of the new units launched in the latest quarter, a record high 80% were pre-sold by the end of June. Overall, 94% of the 110,772 units across all stages of development were sold, leaving an unsold inventory count of 6,794 units — the lowest level in 15 years and equal to only 2.3 months of supply.
The average price for all sold units in active development was $647 psf, growing 10% year-over-year and returning to double-digit growth for the first time since Q1-2012. Selling prices for new units launched in Q2-2017 averaged $757 psf, while asking prices for unsold units grew 28% from last year to $778 psf. A record 12 projects that opened in Q2-2017 sold for over $800 psf, with several approaching and surpassing the $1,000 psf mark.
Resale condominium apartment activity fell 4% year-over-year in Q2-2017, the first decline recorded for resale condos in four years. The moderation in sales followed a 25% increase in Q1-2017, and came on the heels of the provincial government’s new housing policies introduced in April to cool the market. While resale price growth accelerated to 31% on an annual basis in Q2, reaching $650 psf, median monthly selling prices fell by 6% between April and June. However, overall market conditions remained strong during the quarter, with a sales-to-listings ratio of 69% staying well within seller’s market territory, average days on market dropping to a record low of 12, and active listings sitting 20% below their decade average and equal to just 1.4 months of supply.
“The calming of resale prices in recent months and lower potential yields on rental investments due to high prices in new projects should lead to less frenzied demand in the second half of the year”, said Shaun Hildebrand, Urbanation’s Senior Vice President.
“While the current pace of new condo sales shows a remarkable level of confidence in the GTA housing market, activity has reached an unsustainable level for the near-term. Market fundamentals, however, still appear supportive of prices” added Hildebrand.