The demand for larger units is heating up in the GTA’s new condo market
By Lucas on Aug 05, 2016
Urbanation, the Greater Toronto Area’s (GTA) leading source for new condo market intelligence has released its second quarter sales figures (Q2-2016), announcing that the new condo supply has hit a six year low.
In Q2-2016, there were 7,731 new condo unit sales across the GTA, which is a 26% increase from last year, making it the second highest Q2 next to Q2-2011, which saw 8,548 sales. While sales were up, inventory dropped, partially due to the lower amount of launches. Compared to last year, the amount of new condo launches decreased by 9%, which means only 5,106 new units hit the market.
Since there were less launches, the amount of unsold inventory dropped significantly by 26% to 13,528, which is the lowest the inventory has been since 2010. To put this number in perspective, there’s only about 6.8 months of inventory. That means if sales continued at the same pace and no new inventory became available, there would only be enough units to last 6.8 months before they all sold.
Though inventory might seem low at the moment, Urbanation also reports that there were 73 commercial property transactions during the first half of the year. Last year during the same period, there were only 47 acquisitions. Urbanation sees this large increase as a sign of more supply hitting the market in the near future.
“With demand for condos in the GTA pressing forward strongly, new projects are being challenged to enter the market in greater volume. 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,” says Shaun Hildebrand, Urbanation’s Senior Vice President.
On average across the GTA, the selling price per square foot went up to $582. There was much stronger price growth recorded in the core where supply was more limited and demand was very high. The average selling price per square foot went up 4% to $662 and unsold prices went up 7% to $724. The resale market saw an even larger year-over-year increase of 10%, but the price per square foot remains more affordable at $498.
Ubanation looked at the top 20 selling condo developments in the GTA, which accounted for about half of the total sales for Q2-2016, and discovered that demand is shifting to larger units. The sale of two- and three-bedroom units equalled 44% share, up from 35% last year. The sale of one-bedroom+dens fell to a 28% share, which is lower than 39% during the 2011 condo boom. From five years ago, one-bedroom sales fell from 30% to 25% share.
Will we see a surge of inventory during the busy fall season? Will it affect price growth?
