In the GTA new homes market, 2016 set new records for low inventory, high prices and high-rise condo sales, according to a report from the Building Industry and Land Development Association (BILD).
There were 29,186 new high-rise condominium units sold across the GTA in 2016, which is more than in any previous year on record and an increase of 30 per cent year-over-year, according to Altus Group’s 2017 GTA Flash Report, which provides a comprehensive look at the GTA’s real estate market based on 2016 Altus Group data. Sales were up in every region of the GTA, especially in Durham, where sales were more than double 2015 levels.
In 2016, there were a total of 47,161 new homes sold in the GTA, 62 per cent of which were high-rise units and 38 per cent (17,975 units) were low-rise homes. This number is up 12 per cent compared to 2015. The most homes ever sold in the GTA in one year was 53,660 units (72 per cent low-rise and 28 per cent high-rise), which occurred in 2002.
“The decline in low-rise sales in 2016 was due to the lack of product available to purchase, not softer demand,” said Patricia Arsenault, executive vice president of research consulting services at Altus Group, in a press release. “The fact that new product is being quickly absorbed, despite rising prices, shows there is continued buyer interest in purchasing new ground-oriented homes in the GTA.”
The number of new homes available in builders’ inventory across the GTA reached an unprecedented new low at the end of December 2016, while prices for all types of new homes in the GTA broke records. At the end of December 2016, there were 13,670 new homes available for purchase, which is less than half the number of homes available in builders’ inventories a decade ago.
New high-rise supply reached a 10-year low, dropping to 11,792 units last month. At the same time, low-rise supply was 1,878 homes, of which 742 were single-family detached homes. Ten years ago, the supply was much greater with 12,871 high-rise units available for purchase and 17,529 low-rise units (11,602 of which were single-family detached homes).
“We have a shortage of housing supply in the GTA that is approaching crisis levels,” said Brian Tuckey, BILD president and CEO. “Housing is selling as quickly as the industry can bring it to market and the lack of developable land that is serviced with infrastructure, excessive red tape, out-of-date zoning and NIMBYism are hindering our ability to bring more to the market.”
The lack of supply is forcing prices up everywhere, according to BILD. The average price of available new low-rise homes, which includes detached and semi-detached houses and townhomes, was $995,116 in December 2016, and for new single-family detached homes in the GTA, that price climbed to $1,264,604. The average price of new detached homes increased by more than $273,000 over the past year.
Prices for new high-rise homes also reached an all-time high last year. In December, the average price of condo units in the GTA sat at $507,128, up 12 per cent year-over-year. Ten years before, it was $321,353. The average size of a condominium unit in the GTA grew to 826 square feet last month, while the average price per square foot increased to $614. One year ago, the average price was $584 per square foot, while the size of an average suite was 775 square feet.
Investment property sales such as office, retail, industrial, hotel and rental apartment properties, as well as land sales, reached a total of $17.2 billion in 2016, up 12 per cent from one year before and a record for the sixth consecutive year. Residential land sales accounted for a record $5.7 billion of the total, up $640 million compared to 2015. Sales of rental apartment buildings dropped 29 per cent in 2016, the only investment asset class to post a decline in dollar volumes.
According to the 2017 GTA Flash Report, total investment property sales volumes were relatively equally split between the City of Toronto and the 905 regions. In addition, the number of foreign investors in the GTA seem to be declining, as only one in 10 renters living in condominium units reported the unit owner was located outside of Canada.
The report also stated that home buying intentions in the GTA showed no moderation despite tighter mortgage insurance rules introduced in late 2016. Brampton was the top municipality to purchase a new low-rise home in 2016, followed by Vaughan and Milton. In high-rise homes, the top three submarkets in 2016 were Downtown West, Downtown East and the Sheppard Corridor.