There’s no slowdown in sight for the Greater Toronto Area condo market – multi-family and high-rise units remained firmly in seller’s market territory in the first quarter of the year, despite the entire market softening by double digits following the implementation of the Ontario Fair Housing Plan.
The most recent report from the Toronto Real Estate Board, which measures market activity between January and March, finds that while sales are 29.7 per cent lower than 2017 levels at 5,084 units, an 11.1-per-cent decline in new listings kept conditions competitive among buyers.
That’s also put upward pressure on the average condo price, which rose 9 per cent year over year to $535,447.
“Strong competition between buyers underpinned price growth well above the rate of inflation,” says TREB President Tim Syrianos. “We expect the condo market segment to remain strong throughout the remainder of 2018 and over the longer term, as buyers continue to see ownership housing as a quality long-term investment.”
Related Read: Toronto Condos That Sell for $1,000 PSF
Number of Units for Sale Still Historically Low
While this year’s supply levels are higher than the historical shortage experienced in the first quarter of 2017, months of inventory (which measures the amount of time it would take to sell off all available listings on the market) is between 1.5 – two months. That’s still severely limits choice for buyers and effectively drive prices higher.
Jason Mercer, TREB’s director of market analysis, says that comparable affordability remains the main motivator for condo buyers, especially for first-time buyers who may find themselves priced out of other market segments.
“The condominium apartment market segment continues to have the lowest price point on average compared to other major low-rise home types,” he says. “Strong demand relative to supply will see this segment perform well from a pricing standpoint for the remainder of 2018 and beyond.”
Condo Rental Rates Up 10%
This tight supply and high demand for Toronto condos isn’t just inflating homeownership prices; average rents for GTA-area condo apartments have also skyrocketed for the annual period.
A one-bedroom apartment now rents for an average of $1,995, states TREB’s quarterly rental report, an 11.4-per-cent increase. Two-bedrooms now fetch an average of $2,653 (+9.1 per cent), while three-bedroom rents increased 8.1 per cent to $3,344. Even a bachelor unit now fetches well over a thousand dollars, up 10 per cent year over year to $1,657.
TREB also reports that the number of units listed for rent has declined by 11.8 per cent, resulting in 7.5 per cent fewer leases. Demand was highest for three-bedroom units, with the number of leases increasing 21.4 per cent compared to last year, followed up bachelors, up 11.9 per cent. One- and two-bedroom units actually saw the number of leases fall – likely due to lack of supply – by 10.5 and 5.4 per cents, respectively. Toronto’s vacancy rate remains below 1 per cent – a 16-year low – and has been labelled a “housing crisis” by city councillors.
This isn’t expected to shift anytime soon says Syrianos, as the GTA “continues to be one of the most desirable locations to live in the world and will remain so over the long term.
“As people have moved to the region to take advantage of quality employment opportunities, rental remand as remained strong. The result has been heightened competition between renters in an ultra-low vacancy environment, and double-digit rent growth in some market segments.”