Despite the challenges COVID-19 has created at times, home construction is booming across the larger southern Ontario region known as the Greater Golden Horseshoe (GGH), which encompasses the Greater Toronto and Hamilton Area as well as other municipalities on the outer ring of the region.
In the past two business quarters — Q4 2020 and Q1 2021 — the total number of residential building permits issued within the GGH reached “a record high” of 39,734 units, according to data published in a blog post for Ryerson University’s Centre for Urban Research and Land Development (CUR) last week. This represents a 56 percent rise in permits from the same period a year prior.
Housing Market News Alerts
Sign up for news alerts on the Toronto housing market
Building permits formally allow construction, renovation and demolition activity to occur on a property, and require approval from municipal authorities. Residential permits are considered a bellwether for future home building because they function as a requisite green light for builders to start construction.
Written by John Clinkard, a research fellow at CUR, the blog post explains that a major contributor to this growth was a 73.6 percent year-over-year increase in permits for apartment units. These permits vastly outpaced the 26 percent increase in those issued for ground-related units, which include single, semi-detached and townhouse property types.
In the “outer-ring” regions of the GGH that are located outside of the Greater Toronto Area, the total number of permits issued during the two-quarter period equalled 10,021 units. However, permits for apartment and ground-related homes appeared to be more balanced over the past six months, the blog post said. A total of 5,597 permits were approved for apartment units in the outer GGH community, a 34.1 percent year-over-year gain, while 4,424 permits were issued for ground-related homes, a 35 percent annual increase.
With the price of existing ground-related homes in the GTA having risen by 24 percent over the past year, Clinkard points out that homebuyers have indicated a strong preference for ground-related dwellings over apartments, which have only recorded a 4.3 percent price increase.
The contrast between homebuyer preferences and the “sub-par pattern” of ground-related building permits relative to apartments in the GGH means that prices for ground-related homes are unlikely to ease off in the near future, the blog post says.