July 2016 saw the average price of a new low-rise home in the GTA exceed $900,000 for the first time, according to the Building Industry and Land Development Association (BILD).
The average price of new detached and semi-detached homes and townhomes was $906,508, up 12 per cent year-over-year. According to Altus Group, prices have climbed more than $100,000 over the past 12 months.
The average price of semi-detached homes showed the largest increase, growing by $196,546 year-over-year to a new record high of $771,530. The average price of a townhome was $758,434, an increase of $122,491 since July 2015.
In single-family detached homes, the average price in July was $1,095,910. This average first surpassed $1 million in March 2016.
The cost of a high-rise home in the GTA also surpassed record levels in July. Prices increased seven per cent year-over-year to an average of $475,764, largely due to increases in prices per square foot and larger suite sizes. The average price per square foot increased to a record $594. Suite sizes for mid- and high-rise condo units grew to an average of 801 square feet.
“In previous years, many builders were focused on offering smaller and more affordable units to help first-time buyers enter the market,” said Bryan Tuckey, BILD president and CEO, in a press release. “Recent months have seen the introduction of larger suites to meet the demands of the growing range of buyers who have been priced out of the low-rise market.”
“New low-rise home prices have grown exponentially due to limited supply,” added Tuckey. “Provincial intensification policies, delays in the approvals process and a lack of serviced developable land in the GTA has reduced the amount of new homes coming to the market.”
One decade ago, the supply of new homes in the GTA was at 29,238. As of July 31 of this year, inventory levels fell 41 per cent to 17,213. Of that number, only 1,568 are low-rise homes. This is less than half of the 4,550 homes available one year ago and a significant amount less than the 16,424 available for purchase in July 2006. It is also less than one month of supply based on average 10-year sales trends.
In high-rise homes, supply also fell in July to 15,645 units. This is mostly due to a significant decrease in pre-construction units, which were down 25 per cent year-over-year to 8,499.
Sales of new homes and condominiums in 2016 so far were the highest of the past decade. So far, 2016 has seen the sale of 28,208 homes in the GTA. Of those sales, 15,852 were high-rise units, 36 per cent above the 10-year average. Low-rise rales have also been above average so far this year at 12,356, but this is still a seven per cent decline compared to last year.
July’s new-home sales increased 12 per cent from July 2015 and nine per cent above the 10-year average with 3,131 purchases. Most of these sales were from the high-rise market, which experienced 2,226 home sales, 52 per cent above July 2015 levels. Meanwhile, low-rise sales fell 32 per cent year-over-year to 905.
“The industry’s biggest challenge is bringing enough new homes to market to satisfy demand,” said Tuckey. “Projects are being sold as soon as they come to market, which is driving up prices and reducing choice for new-home purchasers.”