The GTA’s new high-rise market is on course for a record year of sales!

The Building Industry and Land Development Association (BILD) released its new home sales figures for August 2016, announcing that the Greater Toronto Area’s (GTA) new high-rise market is on course for a record year of sales. The low-rise market also had a record breaking month, but not in a good way.

As of August 31, 2016, there have been 17,949 new high-rise sales in the GTA this year, which is a record high (according to the Altus Group, BILD’s trusted source for new home market intelligence). In August, which is traditionally a slow month for the new home industry, there were 1,880 sales.  

While sales were up, the high-rise supply dropped to 14,600 units. The decline is mostly due to the lower amount of units in the preconstruction phase since August is not a busy month for launches. The new low-rise supply dropped to a record low of 1,379 homes.

“Our industry is building to government intensification policy and we are building at least as many high-rise homes as low-rise homes,” says BILD President and CEO Bryan Tuckey. “The supply of low-rise homes – especially single family detached homes – has plummeted in the years since the Growth Plan was introduced, but demand for those types of homes has not diminished. As a result, prices have increased dramatically.”

In June 2006 when the Growth Plan was implemented, there were 16,560 new low-rise units available across the GTA. That’s a pretty big difference compared to today. The lowest supply ever is being met with the highest prices ever. In August, the average new low-rise price was $931,506, which is a 16% increase compared to the same period last year. The average was only $393,398 when the Growth Plan was implemented.

The average price of a new detached home in the GTA last August was $1,166,005, and there were only 595 units available at the end of the month. Compare that to June 2006 when the average was $442,420 and there were 10,823 homes available. Due to the low supply and high prices, sales were down a whopping 44% year-over-year, with a total of just 491.  

When it comes to price growth, the high-rise market has managed to stay steady and healthy over the last few years. The average price of a high-rise unit in August was $480,914, which is 7% higher than a year ago. The average unit size was 808 square feet and the average price per square foot was $595. In June 2006, the average unit size was 913 square feet and the price per square foot was $344.  

“For much of the last decade, condo prices remained stable because units were getting smaller,” Tuckey says. “The price per square foot for condos has been steadily increasing. In the last few months, we have been seeing marked increases in condo prices because average unit size stopped decreasing.”

There are many new low-rise and high-rise launches planned for the fall. We are already seeing sales pick up this month, and October is looking like it will be even busier. Will there be enough inventory brought to market to stabilize low-rise prices?