According to Altus Group’s recently released 2015 Real Estate Review of the GTA’s 2015 new home market, the housing market is resilient due to new record highs for both low and high density residential land sales, strong price increases (especially in low rise homes) and strong sales overall.
Residential land transactions in the GTA increased by 49 per cent in 2015, reaching a record $4.2 billion. Low and high density residential investments each recorded highs of $1.7 billion, which according to Altus Group vice president and chief economist Peter Norman suggests, “Continued levels of strong industry confidence in the prospects for residential development.”
“Altus Group’s review of the GTA’s commercial and residential real estate markets speaks to a mature market that continues to grow,” Norman continued, in a press release. “While the overall Canadian economy faces headwinds, the GTA economy is picking up steam and this is clearly reflected by the 2015 data on residential land sales, low and high rise new home sales and, of course, in the level of resulting construction.”
Norman went on to say that in 2016, the low rise sector will have new development lands come on stream, sales will pick up and single-family housing starts will continue to recover.
Low rise new home sales continued their upward trajectory, posting gains of eight per cent over 2014. In 2015, there were 19,637 sales recorded of low rise homes, 15 per cent above the 10 year average. Annual sales totals were the third highest over the past decade.
By the close of 2015, the average price of a low rise home in the GTA increased 18 per cent year-over-year to $829,766. Meanwhile, the average price for a high rise home in the GTA showed little change over the year before, sitting at $453,083.
“It’s not surprising, given the continued degree of pent-up demand for low rise homes in the GTA, and the still-tight conditions on residential land, that the new home price index continued to climb in 2015,” said Norman. “A widening gap between the growth in low rise home prices and high rise home prices is further evidence of this trend.”
Although high rise homes are comparatively much more affordable than low rise homes, sales in the high rise market declined two per cent year-over-year. However, despite the fall in sales, there were still 21,658 sales of high rise homes recorded in 2015, the fourth-highest amount of annual sales in the last decade.
“What’s most fascinating about the sustained energy of the high rise market is that it was achieved while the industry delivered the second-highest number of completions in the last decade,” added Norman. In 2015, there were 20,625 high rise units completed, down from 2014’s 24,426 completions.
Positive sales results for low and high rise homes has allowed ground related land prices to remain constant compared to previous years. In the GTA, low density oriented sites cost an average of $812,345 per acre in 2015, while medium density or townhouse oriented development sites decreased slightly from 2014’s record levels to $1,834,818 per acre.