The Toronto Real Estate Board (TREB) released its resale and rental condo reports for the first quarter of 2018, announcing a notable increase in average selling price in the Greater Toronto Area (GTA).
Reported through the MLS system, there were 5,084 sales in the first quarter of the year, which is a 29.7% drop compared to the same period in 2017. The average price came in at $533,447, much higher than the 2017 average of $489,599.
“The condominium apartment market segment continues to have the lowest price point on average compared to other major low-rise home types,” says Jason Mercer, TREB’s Director of Market Analysis. “It stands to reason that condos remain popular with first-time buyers. Strong demand relative to supply will see this segment perform well from a pricing standpoint for the remainder of 2018 and beyond.”
Listings fell 11.1% year-over-year to 8,030, leaving the resale condo supply hovering around 1.5 to 2 months of supply. Even at this low number, there’s still more inventory available compared to the first quarter of 2017.
“Seller’s market conditions for condominium apartments remained firmly in place in the first quarter of 2018,” says TREB President Tim Syrianos. “Strong competition between buyers underpinned price growth well above the rate of inflation. We expect the condo market segment to remain strong through the remainder of 2018 and over the longer term, as buyers continue to see ownership housing as a quality long-term investment.”
It’s the same story in the condo rental market. Listings and leases are down while prices continue to rise. The average monthly rent for a one-bedroom condo in the GTA in the first quarter of 2018 was $1,995, an 11.4% year-over-year increase. The average monthly rent for a two-bedroom jumped 9.1% to $2,653.
“The GTA continues to be one of the most desirable locations to live in the world and will remain so over the long term,” says Syrianos. “As people have moved to the region to take advantage of quality employment opportunities, rental demand has remained strong. The result has been heightened competition between renters, in an ultra-low vacancy environment, and double-digit rent growth in some market segments.”
Rental listings fell 11.8% year-over-year with 10,128, and leases decreased by 7.5% with only 6,171. The vacancy rate for rental condos was hovering around 1% at the end of the first quarter.
“The low-vacancy, high rent growth situation that has unfolded in the GTA over the past year will be further exacerbated by the rent control provisions contained in the Fair Housing Plan,” explains Mercer. “Some investors who, previously would have considered investing in rental units may now look elsewhere for returns on their money. This does not bode well for a sustained increase in rental supply over the long term.”
So, both rental and resale condo supply is too low to meet demand. Prices in each market keep going up with no signs of slowing down. We’ll be keeping our eye out for the Building Industry and Land Development Association’s (BILD) monthly new home report to see if a similar trend is occuring in the new condo market.