Toronto is seeing much stronger activity in its market for homes valued at $1 million and lower, especially in the condo segment, according to new data from Royal LePage. Condo units in the GTA saw their average value increase by 7.2% annually during the second quarter of the year, ending up at $542,203.
This made the asset class the fastest appreciating housing type in the GTA – and this will likely intensify further. “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 explained.
“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.” Condos markedly outstripped growth in two-storey homes (1.7% year-over-year to $970,772) and bungalows (1.6% to $809,648). The region’s overall aggregate home price during Q2 2019 was $841,729. Royal LePage predicted this figure to remain relatively steady until year’s end, crawling up by only 1.4% annually.
On the rental side, a dearth of units 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. Data from Statistics Canada showed 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.
The problem is further aggravated by the fact that any additional units that do get built (let alone enter the supply chain) tend to be luxury offerings that get purchased rapidly 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.”