You might associate rising condo prices with downtown Toronto’s high-rise neighbourhoods, but new insights from Zonda Urban (formerly Urban Analytics) tell another story.
The Greater Toronto Area’s 905 region — an area that is characterized by the municipalities surrounding the City of Toronto — have seen newly launched condo prices grow to $1,000 per square foot. This is thanks to climbing construction prices caused by supply chain challenges and a strong rental market, among other contributing factors.
Pauline Lierman, Zonda Urban’s vice-president of market research for Ontario and Quebec, gave Livabl the 411 on new condo price trends in the 905 region.
You mentioned to Livabl that new construction condominiums in Greater Toronto’s 905 region have reached over $1,000 per square foot (PSF). Which areas and communities are seeing the highest levels of price growth?
The GTA has formed a comfortable new geographic ring where newly launched projects will exceed $1,000 PSF. These are mostly comprised of the largest 905 municipalities.
For example, new launch prices have reached $1,150 PSF in the Vaughan Metropolitan Centre area and nearly $1,250 PSF within the Mississauga City Centre. New projects in Erin Mills in Mississauga and along the Trafalgar Road corridor in the Uptown area in north Oakville have reached $1,000 PSF. We have even had new openings in Milton — typically a more “affordable” pocket for condominium apartment development — at $1,000 PSF.
When looking at the data, how quickly have new condominium prices accelerated to over $1,000 PSF over the last year or so? Was this increase occurring gradually or did it evolve suddenly?
Price acceleration in the 905 markets has not been a sudden evolution. Although, the pace of growth has ramped up since mid-2020. For example, we saw new launches of similar building typologies in Oakville jump $120 PSF between mid-2019 from the low $700 PSFs and mid-2020 to mid-$800s PSF, and now we are in the $1,000 range. Larger gains, but not a new trend since 2020. It’s strengthened in the two-year interim.
What would you attribute as the main driving factors that have pushed condo prices over $1,000 PSF? Is this related to rising construction prices, low supply or surging buyer demand?
All of the above. Supply has not really bounced back to the 15,000 levels seen pre-2017. A strong rental market (outside of the COVID-19 impact which the market is rapidly recovering from), and rapidly rising construction costs compounded by the supply chain issues are all having an impact.
Where are prices projected to go from here? Do you imagine a scenario where they will come down, or is $1,000 PSF the new norm?
Unless the pressure on pricing due to the low supply scenario improves, I would expect that pricing will continue to escalate. I would caution, however, that the market has seen sharp rises then periods of flatter growth (for example, 2004 to 2006 and 2013 to 2015).
The market in downtown Toronto for a typical project has been hovering around $1,400 PSF for the past 18 months, yet new launches in the Bloor-Yorkville neighbourhood around $2,000 PSF may allow some room for downtown values to rise. I am watching the 905 markets in particular to see where price resistance could finally set in. Several of these have seen gains upwards of $150 PSF since early 2020.
