Photo: Nuno Job/Flickr
Two new reports have come to the same conclusion: there aren’t enough low-rise homes to go around in the Greater Toronto Area, and this is contributing to soaring price increases for newly-constructed dwellings seen in recent years.
The average price of a new low-rise home — which includes standalone, semi-detached, and townhouses — in the GTA hit $829,766 by the end of 2015, marking an 18 per cent increase over the same time a year before, according to separate commentaries released today from Altus Group and the Building Industry and Land Development Association (BILD).
“It’s not surprising given the continued degree of pent-up demand for low rise homes in the GTA, and the still-tight conditions on residential land, that the new home price index continued to climb in 2015,” said Peter Norman, Altus Group’s vice president and chief economist, in a statement accompanying the Altus release.
Brian Tuckey, BILD’s CEO, agreed in his statement released with the builder industry group’s report. “The escalating price of new low-rise homes is a function of supply and demand,” he said.
“While demand has remained strong, the GTA faces a constrained supply of new low-rise homes coming to market due to a lack of serviced developable land,” he continued. “This significantly affects housing choice for new-home buyers.”
Tuckey’s statement builds on concerns of affordability that the group expressed at the State of the GTA Housing Market event it co-hosted with the Toronto Real Estate Board this past November.
Sales of new homes last year numbered 18,148, an 8 per cent increase when compared to 2014’s totals, and 15 per cent over the average seen over the past decade, which is 17,085, according to RealNet data, which Altus owns and both reports cited data from.
Potential buyers vying for property may want to look towards the high-rise segment, as the average price in this corner of the market has remained relatively flat in recent years, inching down slightly year-over-year in the final month of 2015.
For a newly built high-rise condo unit within the GTA’s borders, the average price dipped to $453,083 in December 2015, a 3 per cent dip.
High-rise sales also slackened marginally. They reached 21,658 last year, 2 per cent shy of 2014’s total.
Norman, the Altus economist, underscored how this decrease came at a time when inventory levels in this segment were at near unheard of heights (a fact which recently spurred the Canada Mortgage and Housing Corporation’s chief economist to tell builders to limit new groundbreakings).
“What’s most fascinating about the sustained energy of the high rise market is that it was achieved while the industry delivered the second highest number of completions in the last decade,” said Norman.