Toronto becoming world-class demand city
Downtown Toronto has reached a next-level high when it comes to condo prices in the city centre. The average cost of a new downtown condo, per square foot, has now reached a $1000, representing an incredible 30% year-over-year increase in Toronto—per square foot.
“It makes living in downtown unaffordable,” says Realosophy President John Pasalis. “To afford that you need to be making one hundred and fifty-thousand dollars before taxes, which a lot of people aren’t making.”
According to Urbanation in their third-quarter report, this price point is here to stay—for now. The average price for a resale condo in Toronto as a whole is $823 per square foot, also unsustainably high, say many. Presently, condos make up about a third of the city’s entire rental market.
Lack of supply for high demand
“The pricing numbers we’re seeing right now are being driven by a lack of supply,” says Toronto realtor Andrew la Fleur. Pauline Lierman of Urbanation agrees, pointing out that the sharp rise in new condos prices is partly because the available inventory is down close to 40% year-over-year. There are about 12,000 new units poised to hit the market before the end of the year, however, which could help stabilize this per square foot cost—at least elsewhere in the GTA, which has also seen huge increases. “Amid record demand and plunging inventory, price growth for new condos continues to accelerate quickly,” reads Urbanation’s market results report.
Forecasters say prices for new condos will continue to increase in the fourth quarter, before a slowdown in both sales and prices in 2018. “Market activity for new GTA condos in 2017 has reached an unsustainable pace and a slowdown in sales next year is highly likely, leading inventory levels to move up towards more historically normal levels and causing less upward pressure on pricing,” reads the report.
That sales slowdown has already become visible. In the third quarter, a total of 4577 new condos were sold in the GTA, down a whole 30% year-over-year.
“A more cautious approach for both developers and buyers in the coming months will help to ensure the transition to a more sustainable pace of activity is orderly,” writes Urbanation senior VP Shaun Hildebrand in a statement.