Photo: Mauricio Lima/Flickr
The high cost of low-rise housing in the Greater Toronto Area has families shopping around in the more affordable condo market, translating to increased demand for bigger multi-room units in high-rise developments.
“Buyers that would have otherwise bought a house in Toronto are opting for larger condos,” says Shaun Hildebrand, vice president of Urbanation, a Toronto condo and rental market research firm.
Data from Urbanation’s Q2-2016 condo market report, published this morning, demonstrates this trend. It breaks down GTA sales by unit type across the top 20 selling new condo projects from April to the end of June.
Across these projects, which accounted for about half of the new condo sales seen over that period, 44 per cent of the units sold were two- or three-bedroom layouts. These sales represented a 35 per cent share of transactions recorded in the top 20 selling projects for Q2 2015.
“With not a lot of supply of these [larger] units in the resale market, new condos have seen rising demand, which is leading developers to shift strategies and include more two-bedroom and three-bedroom units,” he tells BuzzBuzzNews.
Hildebrand suggests buyers will continue showing interest towards multi-room condo units, although to what extent this will play out is unclear. “I do believe [the trend] will persist as demand for condos remains strong among couples and families, as well as downsizers,” he says.
“I’m not sure to what degree the trend will intensify,” Hildebrand adds. “It will be important to also maintain a healthy supply of small units to allow entry points into the market for first-time buyers as well as units intended for rental.”
Buyers purchased 7,731 new condo units of all sizes throughout the GTA in this year’s second quarter, up 26 per cent from activity registered over that period last year, according to the Urbanation report.
That made it the second-busiest second quarter for new condo sales ever, only trailing Q2 2011’s total of 8,548 units.
Urbanation said in the two-page report, “Sales would have been even higher if supply kept pace with demand,” noting new projects launched April through June encompassed 5,106 units, down 9 per cent from those months last year.
By Urbanation’s count, unsold inventory stood at 13,528 units in the second quarter, a 26 per cent drop from what was available to buyers during that time a year ago. At the current pace of sales activity, all these units would sell out in 6.8 months.
On average in the second quarter, new GTA condos were listed at prices working out to $582 per square foot, having inched up 2 per cent over Q2 2015.
However, in the pre-amalgamation City of Toronto (excluding Scarborough, Etobicoke, North York, York and East York) price gains are more pronounced. The average list price of a new condo here climbed 7 per cent year-over-year to $724 per square foot in the second quarter.
If the period of lower supply and heightened sales carries on, Hildebrand is calling for demand to drive prices higher still.
“Should current conditions persist, price pressures for high-rise units can be expected to build, particularly as low-rise housing remains afflicted by record-low supply,” he says.