Record High Condo Sales in 905 as GTA Condo Prices Reach $1,000 PSF
Urbanation Inc., the leading source of information and analysis on the GTA condominium market since 1981, released its Q2-2019 condominium market results.
New condominium apartment sales in the GTA totaled 8,902 units in Q2-2019, surging 77% year-over-year as 10,848 units were launched for pre-sale during the quarter. Sales reached their second highest Q2 level on record behind the market peak in Q2-2017 (11,413 sales), which followed a muted first quarter of activity and brought total first half sales of 11,967 units in 2019 above with the 10-year average of 11,205 units.
The average index price for all sold units in active projects grew 10% year-over-year to $797 psf, with growth weighed down somewhat by a shift in activity to the 905 Region. Units launched during Q2 in the GTA averaged a sold index price of $903 psf, while average prices for remaining inventory reached $1,000 psf for the first time, rising 9% year-over-year. Total unsold inventory increased 46% from last year to 14,587 units, which remained 6% below the 10-year average and equaled 7.8 months of supply, up from 5.3 months in Q2-2018.
Activity for new condos was driven higher by strong fundamentals including a return to record-low borrowing costs, record-high population inflows, a healthy job market and tight conditions in the resale market, but also a huge shift in demand to relatively low-cost projects. Of particular importance, virtually every project launched for pre-sale in the second quarter had received planning approval, reducing the risk of cancellations which have been on the rise over the last couple years.
Projects that launched for pre-sale during the second quarter that were priced below $900 psf sold 65% of their units, compared to 54% for projects that launched at over $900 psf. The handful of projects that launched for less than $600 psf in the outskirts of the GTA-Hamilton region sold 68% of their units. However, the strongest segment of the market was for better-located projects in the outer 416 and 905 municipalities, many of which were transit-accessible, which launched for between $800 and $900 psf and sold 69% of their units, with six of thirteen projects achieving more than 90% absorption. For projects launched between $900-$1,000 psf, absorption fell to 58%, declining further to the 50% level for projects that opened for more than $1,000 psf, which included four of seven projects selling less than 50%.
Only six projects launched for pre-sale in the former City of Toronto in the second quarter, achieving 44% absorption of 2,226 units opened at an average of $1,284 psf. This could be attributed to uncertainty and delays with obtaining approvals under changes in planning regimes, high land and development costs relative to achievable selling values, more consideration being given for purpose-built rentals, and some investor fatigue for high-priced projects in the core.
The result was new condominium sales in the former City of Toronto declining 12% year-over-year in Q2-2019 to 1,682 units — the lowest second quarter total for the market area since 2009 and equal to a low of only 19% of GTA sales. On the other hand, sales in the outer 416 (Scarborough, Etobicoke and North York) doubled from a year ago to 2,093 units and 905 region sales increased nearly 150% to 5,127 sales, representing a record 58% of GTA sales.
Projects priced below $1,000 psf have attracted a wave of demand as buyers seek out “value sites”. Pricing for remaining units in the former City of Toronto averaged of $1,291 psf, which compared to $894 psf in the outer 416 municipalities and $740 psf in the 905.
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