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Toronto’s new condo market is facing headwinds.

New Metro Toronto condo prices increased yet again in the first quarter of the year, but the gains fall short of the market’s performance throughout the second half of 2018, according to Statistics Canada.

As per the agency’s Experimental New Condominium Apartment Price Index, new condo prices were up 1.1 percent in the first three months of this year, compared to the same period last year.

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The index, which was launched in mid-February, is based on data gathered via a monthly electronic survey of homebuilders. Statistics Canada analysts control the data to take features such as premium features and upgrades into account.

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Strong fundamental drivers of home prices, including a growing population, are often cited as being present in the Toronto area, so what might be behind slowing price gains?

Edgard Navarrete, a regional economist for Central 1 Credit Union, explains in a recent Ontario Economic Briefing: “Despite strong population growth supporting new housing demand, a slowing economy and tighter mortgage lending rules may be the reason for slower price growth and fewer sales.”

Statistics Canada notes prices aren’t the only way in which the market is showing signs of cooling.

“The cooling new condominium apartment market in Toronto was also reflected by the fewest apartment and other unit type starts in two years,” the index release says.

However, Navarrete suggests new apartment construction is “still robust” across Metro Toronto, despite dropping 38.1 percent annually in the first quarter.

“Toronto’s new apartment construction is robust and has averaged 73.6 percent of all new construction in Ontario over the last five quarters,” he writes.

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