Condo sales by property investors have fallen between 30-40 per cent in recent months, according to new industry research.
This is a dramatic drop from previous numbers, as investors made up an estimated 95 per cent of pre-construction condo sales in Toronto last year. According to Ben Myers, executive vice president of Urbanation, this decline has rendered the future of a once-hot market uncertain.
“Things have definitely slowed,” he says. “I do anticipate that pricing is going to be fairly flat in both the new and resale condo market for six or seven months. After that, it becomes a little hard to predict what will happen.”
While Myers in not fazed by current levels of unsold inventory (89 per cent of condos currently under construction across the GTA are already sold), there are concerns about the thousands of units still planned.
Investor interest in the condo market has been a primary driver in the development surge across the GTA. Less than 30 per cent of condos were bought by investors up until about five years ago, adds Myers. Real estate consultant Barry Lyon believes developers will have to pull out the stops to bring this profitable sector of buyers back to the market.
“I think 2013 will be the year of incentives,” he says. “The industry is going to be doing everything it can to persuade investors to come back.”
While many developers are choosing to delay the launch of some inventory, many projects will simply be shelved, adds Lyon. Others are hoping to ride out the dip on account of prime locations that will hopefully still attract buyers, and so tenants, regardless of the market overall.
But is it enough to buoy a shrinking market?
Lyon laments that the few investors who still have an appetite for high-rise, high-end condos may simply not be enough.
“The golden era of high rise condos is turning to bronze,” he says.
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