According to the Building Industry and Land Development Association (BILD), the prices of new homes in the GTA showed few signs of slowing down in February.
The benchmark price for condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units climbed again in February to $729,735, an increase of 39.5 per cent year-over-year, according to Altus Group. The benchmark price for available new single-family homes, including detached, linked and semi-detached houses and townhouses (excluding stacked townhouses), fell slightly from $1,229,454 in January to $1,219,874 in February, but was still 12.8 per cent higher than February 2017’s average.
“Tight supply continues to drive pricing levels,” said David Wilkes, BILD president and CEO, in a press release. “This is especially true when it comes to the pricing of single-family homes.”
Although the supply of new homes on the market slightly increased in February to 12,896 units (comprised of 9,285 condominium apartments and 3,611 single family homes), supply is still well below what is considered a healthy level. Supply of new housing is generally measured by the number of new homes available for purchase in builders’ inventories at the end of the month and includes units in pre-construction, under construction and completed projects. A healthy market should have nine to 12 months’ worth of inventory available, but currently, inventory sits at about four months’ worth, based on the pace of sales over the last year.
“While single-family new home inventory is up from last year, it is still quite low in historical terms,” said Patricia Arsenault, Altus Group’s executive vice president, research consulting services. “Moreover, there is a dearth of new single-family product that is affordable to a broader range of buyers – fewer than one in five single-family homes available to purchase at the end of February were priced below $750,000.”
Sales of new homes in the region rose month-over-month in February, with 2,159 new homes sold, but remained soft relative to the very strong sales recorded last February. Sales of new single-family homes fell 82 per cent year-over-year and 79 per cent below the 10-year average, with 264 units sold in February. Sales of condominium apartments declined 50 per cent year-over-year, but were still 17 per cent above the 10-year average, with 1,895 units sold.
According to Wilkes, the government regulation is a significant factor influencing the industry’s ability to increase the supply of new housing in the GTA.
“We encounter excessive red tape, out-of-date zoning, and lack of developable land serviced with critical infrastructure,” he said. “That is why, as the municipal elections approach, we’ll be initiating public conversations about ways policy makers, urban planners, our industry and residents can work together to address the GTA’s housing supply challenge.”