Trend was driven by strong demand for homes valued at $1 million and lower
Amid sustained high levels of demand, condos continued to be the fastest appreciating residential property type in the Greater Toronto Area, according to the latest Royal LePage House Price Survey.
The region’s condo units enjoyed a 7.2% year-over-year increase during the second quarter of the year to reach $542,203.
In comparison, growth in the other asset classes was considerably more muted. The value of two-storey homes in the GTA crept up by just 1.7% annually to $970,772 while bungalows went up by 1.6% to $809,648.
Across all housing types, the aggregate price of a property rose by 26% year-over-year during Q2 2019 to $841,729. Royal LePage predicted that the market’s prices will remain relatively steady by the end of this year, with aggregate prices ticking up by only 1.4% annually.
The condo market’s dynamism was spurred by robust consumer demand for homes priced at $1 million and lower – a trend that will only get stronger soon.
“Recent economic announcements aiming to strengthen first-time home buyers’ purchase power including CMHC’s incentive, have the potential to impact the condominium market,” Royal LePage Signature Realty president Chris Slightham said.
“Our team witnessed some buyers putting decisions on hold until the new mortgage incentives get fully established, waiting to see how they can benefit from the encouraging new measures.”
These positive prospects have to be seen in light of recent ownership numbers, however. Data from Statistics Canada indicated that as much as 39.7% of Toronto’s condo units were found to be either vacant, rented out, or used as second properties by their owners.
Lack of supply driven by the intense popularity of condos used as investment assets has pushed up the city’s rent rates by 30% between 2006 and 2018.
Worse, any additional units that do get built and enter the supply chain tend to be luxury offerings that get acquired immediately by foreign investors, Realosophy Realty president John Pasalis stated.
“Five years down the road, do we really need 50,000 micro-condominiums that are renting for C$2,000 a month?” Pasalis said, as quoted by The Guardian. “I think this is the risk when your entire new housing supply is driven by what investors want, rather than what end users want.”