Whatever comes down, might eventually go up
The Canadian housing is finally cooling, but the preconstruction condo market in Toronto GTA is far from cooling. Average prices for preconstruction condos in the most desirable areas in Ontario are still in the $700,000 range.
Here’s a wrap-up of the condo rental and preconstruction markets in the Toronto GTA.
Condominium (Rental) Market Summary – up in the sky
- The GTA rental market strengthened considerably in the second quarter of 2022 due to a reacceleration in population growth, near record-low unemployment, and a sharp reduction in home purchasing power as interest rates increased.
- As the GTA rental market fully recovered from the effects of COVID-19 and rents reached new highs, the smallest and least expensive unit types experienced the strongest growth rates. After seeing rents fall the most during the first year of the pandemic as renters moved out of small spaces in the core, with rents down by as much as 24% for studios as of Q1-2021, studio and one-bedroom units recorded annual rent growth rates of 25% and 19%, respectively in Q2-2022.
- With rental demand flowing back into the core, vacancy rates in the GTA declined to 1.4% from 5.1% a year ago.
Condominium (Resale) Market Summary – average price now $770,000
- While some first-time buyers have temporarily focused on renting as they sit on the sidelines, the less expensive entry prices of condos versus freehold homes have provided an alternative option for purchasers looking to mitigate the impact of higher borrowing costs.
- The average selling price in Q2 2022 rose 12.2 percent year-over-year to $769,999. Year-over-year price growth was stronger in the suburban regions surrounding Toronto.
- Condo market conditions became more balanced in the second quarter, with buyers benefitting from substantially more choice. However, the pace of annual average price growth remained above the rate of inflation, particularly in areas outside of Toronto that are offering attractive price points.
Condominium (Preconstruction) Market Summary- sales down, prices high
- Greater Toronto Area (GTA) new condominium sales totaled 6,792 units in the second quarter, declining 19% from the first quarter and 24% year-over-year but remaining above the 10-year average of 6,302 sales. Activity was supported by the launch of 9,924 new presale condos in Q2, which represented the third highest volume of new units brought to market on record, exceeding the 10-year average (6,937) by 43%.
- New condo prices for available units continued escalating to reach a record-high average of $1,453 psf in Q2-2022, up 4% quarter-over-quarter and 20% year-over-year, partly the result of an increase in inventory at higher-priced projects.
As developers grapple with quickly rising construction costs, labour shortages, large increases to development charges, higher interest rates, and lengthy approval timelines, there appears to be little, if any, room for new condo prices to adjust lower in the current environment.
- As of Q2-2022, there was a record 123,654 new condominiums either in pre-construction sales or under construction in the GTA. Following the boom in new condo activity in the suburbs over the last three years, there is now a greater number of new condos in development in the 905 region of the GTA at 51,168 units than in the Toronto core (i.e. the former City of Toronto) at 46,391 units.
The remaining 26,095 units in development were located in outer-416 former municipalities of North York, Etobicoke, York, East York and Scarborough.
Recently launched preconstruction condos in Toronto GTA
● AKRA Condos in Toronto at Yonge/Eglinton by Curated Properties
● 8 Elm Condos in Toronto at Yonge/Dundas by Reserve/Capital
● Daniels on Parliament Condos in Toronto at Dundas/Parliament by Daniels
● 316 Junction Condos in Toronto at DuPont/Symington by Marlin Spring
● The Dawes Condos in Toronto at Danforth/Main by Marlin Spring
● Forma Condos in Toronto at King/John by Great Gulf
● Curio Condos in Etobicoke by Marlin Spring
● 75 James Condos in Hamilton by Fengate/Liuna
● The Design District Condos in Hamilton by Emblem
● Bristol Place Condos in Brampton by Solmar
● Gemini Condos in Oakville by Castleridge
● North Oak Phase 3 in Oakville by Minto
● Bronte Lakeside in Oakville by Alliance United
● Harbour Walk Condos in Mississauga by Tridel
● Bridgewater Condos in Mississauga by Kilmer/DiamondCorp/Dream/FRAM+
● W Condos in Whitby by Ace Development
● Porta Condos in Belleville by MDM