Lack of new builds sees GTA housing prices climb
Toronto’s housing market continues to suffer, with the number of new homes being built continuing to slump. First time buyers are faced with fewer options, as the supply of condominium apartments and single-family homes remains well below what is considered a healthy level. This, in turn, serves only to boost the growing cost of property in the city.
“Tight supply continues to drive pricing levels,” said David Wilkes, Building Industry and Land Development Association (BILD) President and CEO. “This is especially true when it comes to the pricing of single-family homes.”
The benchmark price for condominium apartments, stacked townhouses and loft units has once again risen to $729,735-that’s 39.5% above last February, according to research by Altus Group. The benchmark price for newly constructed single-family homes remains 12.8% above last February’s price.
Supply of new housing is usually measured by the number of new homes available for purchase in builders’ inventories at the end of each month. Ideally a healthy new home market should have between nine months and one year’s worth of inventory; in the GTA the current market sits at around four months worth based on sales in the past 12 months. Although sales of new homes rose in February from the previous month, they still remain relatively low in comparison to the strong-sales recorded the previous year. In fact, sales of new single-family homes were down 82% from February 2017. Furthermore, sales of condominium apartments were down 50% from last February, something that is considered quite low in historical terms according to Patricia Arsenault, Vice-President of Research Consulting Services for Altus Group.
“There is a dearth of new single-family product that is affordable to a broader range of buyers,” she said. Fewer than one in five single-family homes available to purchase at the end of February were priced below $750,000.”
The Toronto market is losing in comparisson to cities like Montreal, which has seen a boost in housing sales in recent months; with the lack of affordable housing in the city being blamed for what experts are calling "brain drain"-young professionals taking their working talents to more affordable regions.
Mr. Wilkes points a finger to government regulation, something he says plays a huge role in influencing the industry’s ability to increase the supply of new housing. “We encounter excessive red tape, out-of-date zoning, and lack of developable land serviced with critical infrastructure,” he said. “That is why, as the municipal elections approach, we’ll be initiating public conversations about ways policy makers, urban planners, our industry and residents can work together to address the GTA’s housing supply challenge.”