With oil prices falling and Canada’s banks facing downgrades and layoffs, Toronto’s condo market is likely headed for “a moderate slowdown,” said condo research firm Urbanation.
Consumers in the Greater Toronto Area may be benefiting from cheaper gas prices and lower interest rates, but roughly half of the Toronto-area condo market is driven by investors, who are particularly sensitive to turmoil in the financial markets brought on by broader economic uncertainty across the country.
“While plans can change quickly with market conditions, it can be said that the industry doesn’t appear to be gearing up for a banner year in 2015,” Urbanation senior-vice president Shaun Hildebrand wrote.
Sales of new units are expected to reach 18,500 this year, down from 21,605 last year, while levels of unsold inventory should settle around a 10-month supply, down from 16.5 months at the start of last year, as developers pull back on launching projects. The research firm predicts that the number of new units in pre-construction will fall to 16,500 from 18,375 last year.
Last year’s market was among the strongest on record, behind only 2011 and 2007, as sales of newly built units jumped 51 per cent from the lows of 2013. Sales grew 25 per cent in the fourth quarter compared to the same time last year, while prices per-square-foot for new units grew by an average of 3 per cent last year.
Among resale condos, sales grew by 14 per cent in 2014 to reach a record high of 17,819 units, with prices growing an average of 4 per cent throughout the year, to average $391,000.
More than 52,400 new units were under construction in the Toronto area at the end of last year, down from 59,000 a year earlier. Another 28,447 pre-construction units hit the market last year and 69 per cent have been sold, the research firm said.