Urbanation, the authority on the Greater Toronto Area’s (GTA) new condo market statistics, released its second quarter 2017 (Q2-2017) report, announcing that the new condo market is still surging as the resale condo market moderates. Also, new condo supply has fallen despite record high launches.
In Q2-2017, there were 12,138 new condo sales in the GTA, which is 62% higher than last year, making it the second consecutive quarterly record. In the first six months of the year, there were 21,968 new condo sales.
As of the end of June 2017, demand continued to outpace supply in the GTA’s new condo market, though 11,849 new preconstruction units in 41 projects were brought to market in Q2-2017, shattering the record of 9,182 set in Q2-2011. By the end of Q2-2017, 80% of these units were sold.
In all stages of development (preconstruction, under construction, complete), there are 110,772 active units in the GTA, and 94% of them are sold, leaving an unsold inventory of just 6,794. This is the lowest the new condo supply has been in 15 years and equals just over two months of supply.
“While the current pace of new condo sales shows a remarkable level of confidence in the GTA housing market, activity has reached an unsustainable level for the near-term,” says Shaun Hildebrand, Urbanation’s Senior Vice President. “Market fundamentals, however, still appear supportive of prices.”
The average price for a sold unit in active developments hit $647 per square foot, which is 10% higher than the same period last year. This also marks the first double digit price growth since Q1-2012.
The average selling price for new units launched in Q2-2017 was $757 per square foot, while the asking price for unsold units went up 28% to $778 per square foot. There were 12 projects that launched in Q2-2017 that sold for an average over $800 per square foot, a couple of them surpassed $1,000 per square foot.
In the resale market, activity fell 4%, which was the first quarterly drop in four years. “The calming of resale prices in recent months and lower potential yields on rental investments due to high prices in new projects should lead to less frenzied demand in the second half of the year,” says Hildebrand.
Price growth increased 31% year-over-year to $650 per square foot in the resale market, while the median monthly selling price fell 6%. The Toronto Real Estate Board (TREB) recently announced that the province’s Fair Housing Plan has caused some buyers to take a step back to wait and see what happens with the market.
If you thought two months of supply in the new condo market was low, the resale condo market only has 1.4 months’ worth! This could be another reason for the surge in sales in the new condo market; there’s simply a wider selection.
While the new condo market was super hot through the first half of the year, Urbanation expects “a more cautious approach” in the second half of 2017.