Pre-sale activity slows as development reaches new highs
TORONTO – May 01, 2018: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q1-2018 condo market results today.
Highlights of the release include:
- Condo apartment construction reached a record 61,337 units as of the end of Q1-2018
- An additional 37,389 new condo apartments were in the pre-construction marketing phase, of which a record 86% were pre-sold
- New condo apartment sales totaled 4,219 units in Q1-2018, returning to more typical first quarter volume following a record 9,744 sales a year ago in Q1-2017
- Sales activity was weighed down by fewer new launches, which dropped by 38% year-over-year to 4,029 units
- New launches continued to sell quickly, with 64% of new offerings sold in the quarter, down from 80% in Q1-17 but above the 10-year average opening quarter absorption rate of 53%
- The average sale price for new launches in Q1-18 was $843 psf, moderating from $893 psf for new launches sold in Q4-17 as fewer downtown core projects opened this year, but up 23% compared to Q1-17 launch prices ($686 psf)
- With unsold inventory at a 16-year low of less than 8,000 units, asking prices for remaining units grew 29% year-over-year to $914 psf
- The new condo market became aligned with resale condo activity during Q1, which declined 31% year-over-year to 4,297 units following new mortgage stress test requirements for uninsured borrowers introduced at the beginning of the year
- Resale condo prices have remained resilient, growing 2% quarter-over-quarter and 11% annually to an average of $661 psf
- With the tougher qualification rules and average condo prices reaching $558,000 in Q1 ($600,000 in the City of Toronto), demand for studio units strengthened, with average prices rising 24% year-over-year to $381,000.
After a record 35,000 new condos were sold in 2017, activity fell back in line with its 10-year average in the first quarter. Developers and purchasers acted more cautiously in early 2018 due to uncertainty regarding the impact of new lending policy changes and the rapid run-up in prices that occurred last year. Furthermore, with a record number of units underway and construction costs and development charges rising quickly, combined with some heavily reported project cancelations, a more prudent approach to new launches was taken in Q1. Nonetheless, the high-rise market continued to outperform in the GTA as buyers gravitated to more affordable options. A total of 6,455 units started construction in Q1-2018, more than doubling the 3,101 units that started a year ago in Q1-2017.
“Moderation for new condo presales was in order after a breakneck pace in 2017”, said Shaun Hildebrand, Urbanation’s Senior Vice President. “Industry capacity issues should keep pre-sale activity in check this year, but with inventory levels exceptionally low, prices continue to remain propped up” added Hildebrand.
Urbanation is a real estate consulting firm that has been providing market research, in-depth market analysis and consulting services to the condominium industry since 1981. Urbanation uses a multi-disciplinary approach that combines empirical research techniques with first-hand observations and site visits. On a quarterly basis, Urbanation tracks the new, resale, rental and proposed condominium apartment markets in the Greater Toronto Area. Urbanation also actively conducts site specific market feasibility studies across the country for both condominium and purpose-built rental apartment projects.
www.urbanation.ca Media Contact: Shaun Hildebrand
416 922 2200 ext. 243