Sales of new houses more than doubled in the Toronto region last year, and new condo sales rose 27 per cent, with robust activity in the city’s surrounding regions.
About 9,500 new single family homes sold last year, compared with 3,710 in the previous year, though still below the 10-year average, according to real estate data company Altus Group.
Meanwhile, nearly 27,000 new condos sold last year, compared with 21,145 in the previous year, as a slew of new multifamily projects got off the ground.
Toronto was responsible for the majority of the new condo purchases, with sales of the preconstruction, under construction or newly built units increasing 5 per cent to 14,670.
But north of the city, in York region, sales doubled. West of the city, in Halton, sales also doubled and in nearby Peel region, sales rose 55 per cent. (Though the number of units was much smaller than Toronto.)
A lack of housing in the country’s most populated city has triggered a wave of new multifamily projects. Dozens of condo developments are in the works, amid sustained demand from investors and residents who need a place to live.
Nearly 32,000 condos are scheduled to be completed this year, according to real estate consultancy Urbanation. That is an unprecedented number of new units with about two-thirds in the city of Toronto and the remaining in the surrounding regions including York.
Local governments and the federal housing agency have been pushing for more dense living arrangements such as condos and duplexes in order to make housing more affordable. Still, demand is high enough that prices have been steadily rising.
The benchmark price, or the average asking price of a new condo minus the lowest and highest values, rose to a record high of $916,585 last year in the Greater Toronto Area, according to the Altus report.
Part of that is driven by investors, said Simeon Papailias, a realtor with Royal LePage Signature Realty who specializes in preconstruction sales: “Regular people are seeking ways to grow their wealth and investments.”
Condos and other types of multifamily units are typically cheaper than a detached house. But the Altus report shows prices for new single-family homes declined from the peak of the housing boom in 2017, amid a number of new policies aimed at cooling market including the mortgage stress test.
Implemented in 2018, the stricter rules require borrowers to qualify at a rate two percentage points higher than the market rate or the Bank of Canada’s benchmark five-year rate, which is at 5.19 per cent, whichever is higher.
That along with three interest-rate increases created uncertainty in the market and sales of new condos and single-family homes declined in 2018.
The stress test “disproportionally impacted single-family homes because of the higher costs,” said David Wilkes, president of the industry group Building Industry and Land Development Association.
The Altus report shows the average prices for houses and condos converging. While the benchmark price for a new condo climbed over the past two years to $916,585, the benchmark price for a new single-family house fell to $1,088,317 over the same period.
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