FOR
IMMEDIATE RELEASE
ATTENTION:
News; Financial; Real Estate Media
Cautious
developers hold back and reevaluate pricing
TORONTO – November 1, 2012: Urbanation Inc., the leading source of information and analysis on the
Toronto condominium market since 1981, today released its Q3-2012 market
overview.
In the
Toronto Census Metropolitan Area (CMA) there were 3,317 new condominium
apartment sales in Q3-2012, a decrease of 30% from the second quarter.
“With slowing sales and a record level of
unsold inventory in the market in the second quarter, condominium developers
reacted quickly by delaying their project launches, especially in the ‘416’
area,” says Ben Myers, Urbanation Executive Vice President. “Just five
projects launched in Toronto in Q3-2012, as developers chose to review their
pricing assumptions and unit mix”.
The average
unsold unit in the Toronto CMA was being offered at $573 per-square-foot (psf)
at the end of Q3-2012, an increase of just 2% year-over-year. Unsold pricing in
the former City of Toronto remains virtually unchanged from one year ago,
rising from $668 psf to $670 psf.
The lack of
new site openings in the third quarter resulted in a decrease in unsold
inventory from the CMA record high of 18,123 units in Q2-2012 to 17,182 units
in Q3-2012. With 20% of the 86,108 units (341 projects) unsold, the share of
unsold inventory in the Toronto CMA remains below the 10-year average of 22%.
With
condominium apartment construction starts outpacing completions for the 8th
consecutive quarter, units under construction in the CMA have set another
record high at 207 projects and 56,336 units.
“The number
of unit completions in 2012 are well below our forecasts, as construction
delays have pushed back occupancy on a number of projects” adds Myers. “The
average project that completed construction in 2012 took 3.85 years from sales
launch to occupancy, compare that to 2003, when the average took just 2.68
years for a similarly sized project (205 units vs 197 units)”.
The reduced
level of project completions has contributed to a very tight condominium rental
market, as Urbanation’s UrbanRental
report indicates a record-high lease-to-listings ratio in Q3-2012, an
indication that demand is much higher than supply for investor held rental
units.
The resale
condominium market conditions also softened in Q3-2012, as transactions fell
32% quarterly in the Toronto CMA from 5,050 in Q2-2012 to 3,413. Pricing on a
per-square-foot basis remained flat in comparison to the second quarter at $407
psf, as both the average unit size traded and the average end-selling price decreased
(910 sf to 891 sf / $370,000 to $362,000).
“The change
in the mortgage insurance rules may have forced many buyers to settle for
smaller units then they had previously desired” says Myers. “The number of
resale transactions for units priced over $400,000 fell 40% compared to last
quarter, while there was a 38% quarterly drop in units traded over 1,000 sf.”
Just 10
projects, or 2,035 condominium units registered in Q3-2012, and the dearth of
new supply resulted in a decline in resale listings quarterly from 10,163 in
Q2-2012 to 9,032 in Q3-2012. Urbanation expects a much higher level of resale
listings in 2013, as more than half of the 56,336 condominium units under
construction are expected to complete construction next year.
The 28,000-plus
completions next year could add as many as 14,000 new condominium rental units
to the Toronto CMA via private landlords, which would represent a whopping 25%
increase in condominium rentals in the Metropolitan Area.
- -
ABOUT
URBANATION
Urbanation is Canada’s leading condominium
market research company. Since 1981, Urbanation has analyzed the Toronto
condominium market, publishing the “industry bible” – Urbanation’s Condominium Market Survey. This
quarterly report tracks new, resale and future condominium projects. The newest
report from Urbanation is UrbanRental,
which tracks activity in the condominium rental market. Urbanation also
provides the development community with essential consulting services, which
include site and topic specific market studies and surveys.
Media Contact: Pauline
Lierman
Pauline at Urbanation.ca
416 922 2200
With the Toronto condo market hot, many construction companies have helped to fuel a condominium construction boom in the GTA that has been under way for more than 7 years now.
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