New condominium apartment sales in the Greater Toronto Area (GTA) rose four per cent year-over-year to 4,738 units in Q3-2018, reaching the third-highest Q3 volume in the past decade, according to Urbanation Inc.’s Q3-2018 condo market results.
To date this year, there have been 14,055 unit sales in the GTA, a decline of 46 per cent from the record high of 25,839 sales recorded during the same period last year. Resale condominium apartment sales climbed two per cent year-over-year in Q3-2018 to 5,253 units, representing the first annual increase since Q1-2017.
Unsold inventory of new condos currently in development was up two per cent compared to Q2-2018 and 22 per cent on an annual basis to 9,927 units, although this figure remained 33 per cent below the 10-year average of 14,806 units. Unsold inventory equaled 5.2 months of supply, compared to 5.1 months in the last quarter, and 3.0 months one year ago.
Despite this increase in supply, the average sale price for all actively marketing projects in Q3-2018 increased by 11 per cent year-over-year to $745 per square foot, with asking prices for unsold units up by 19 per cent to an average of $972 per square foot. In new projects that opened for pre-sale during Q3, prices climbed 33 per cent year-over-year to an average of $745,416. The average size of a new unit launched in Q3-2018 was 714 square feet, resulting in average per square foot prices for newly launched units surpassing $1,000 for the first time (reaching $1,044 per square foot).
Meanwhile, average resale condominium prices increased by 6.5 per cent year-over-year to $690 per square foot, or $577,000 based on an average unit size of 837 square feet. This figure represents a strong deceleration from the 27 per cent annual pace recorded in Q3-2017.
Construction started on a record-high 8,150 new condominiums in Q3, increasing the total number of condominium units under construction to a new high of 67,581 in 236 buildings. On average, projects under construction were 95 per cent pre-sold.
Quarterly new condo sales have reached a relatively steady pace in recent quarters, following chaotic levels in 2017. However, it appears as though the market may receive a boost in the remaining months of this year as a significant number of new units launch for pre-sale, which should be met by strong demand, given current trends.
The average opening quarter absorption rate for new launches has remained over 55 per cent for 11 straight quarters, since Q1-2016 (averaging 58 per cent in Q3-2018). This was not solely a reflection of increased investor activity, as projects with a mix of buyers, as well as those focused primarily toward end-users, have been achieving high absorption rates upon opening.
However, not all projects are selling quickly, as eight of 17 projects launched in Q3-2018 sold less than 30 per cent of their units, compared to only one of 15 launched one year ago, which Urbanation finds points to increased price sensitivity, a dispersion of new projects across the GTA and the importance of a strong marketing campaign. Urbanation suspects that, going forward, high price points in the current new condominium market should prevent another sustained resurgence in sales activity in the immediate future.
“The condominium market has performed exceptionally well during its transition from an overheated 2017,” said Shaun Hildebrand, president of Urbanation, in a press release. “Low supply and stabilized demand should continue to provide structural support for prices. However, signs of a slower pace of price growth ahead from factors including rising interest rates and higher completions should be factored into decision making with respect to purchasing investment units.”