Condominium apartment sales in the Greater Toronto Area (GTA) climbed 22.3 per cent year-over-year to 6,831 in the fourth quarter of 2016, according to the Toronto Real Estate Board (TREB). Over that one-year period, new listings also fell by 13.4 per cent, causing market conditions to tighten substantially over the past year.
“Gone are the days when we were concerned about a potential glut in inventory in the condominium apartment market. The supply concerns that have been top-of-mind for ground-oriented home types are also now a reality for the condo market segment,” said Larry Cerqua, TREB president, in a press release. “Regardless of the price measure considered, heightened competition between condo buyers has resulted in double-digit price inflation.”
At the end of the fourth quarter, the MLS Home Price Index benchmark price for a condominium apartment was up by 15.2 per cent. The average condominium apartment selling price for the fourth quarter was up by 14.5 per cent to $437,281.
“First-time buyers represent an important component of home ownership demand,” added Jason Mercer, TREB’s director of market analysis. “Many households looking to purchase their first home will consider a condominium apartment. Interest in this market segment has continued to grow as prices for low-rise home types have increased on a sustained basis.”
The condominium apartment rental market also tightened in the fourth quarter of 2016. There were 5,717 condominium apartment rental transactions through TREB’s MLS System during the final three months of 2016, which is a 5.8 per cent decline compared to the same period in 2015. However, rental transactions were down because of a lack of units available for rent, not because of dwindling demand. The number of condominium apartments listed for rent during the fourth quarter of 2016 dropped by more than 14 per cent to 9,545.
“We have talked a lot over the past year about a lack of inventory for ownership housing. What is less well known is the fact that rental market conditions also tightened over the past year,” said Cerqua. “Competition between renters has increased, leading to very strong year-over-year growth in average rents.”
The average one-bedroom condo apartment rent was $1,776 at the end of 2016, which was an annual increase of 7.4 per cent compared to Q4-2015. Over the same period, the rent of a two-bedroom condo increased by eight per cent to $2,415.
“The demand for rental accommodation has increased in the GTA. The condominium apartment vacancy rate dropped markedly between 2015 and 2016. In many parts of the GTA, investor-owned condo apartments are the only option for renters looking for new, modern units in sought-after neighbourhoods,” added Mercer. “In the absence of more units coming available, expect above-inflation rent growth to continue.”