In a roundtable interview with Greg Bonnell of BNN
, the condo executives agreed that these growth indicators have no signs of stopping any time soon, and that internal threats to market stability are minimal.
“If supply remains tight and demand remains the same, we’ll see the numbers [remain] fairly consistent with 2015 in terms of both sales as well as prices maintaining their numbers, if not going up,” said Paul Golini of Empire Communities.
Factors such as low vacancy rates and an extremely dynamic market shield the Greater Toronto Area (GTA) from the shockwaves of the global oil crashes that have severely affected the Canadian dollar petro-currency, even as reduced purchasing power is pushing buyers towards more reasonably priced options.
“The vast majority of what we sell in this marketplace is between $300,000 and $500,000. It’s all predicated on affordability,” said Tridel’s Jim Ritchie.
Barry Fenton of Lanterra Developments concurred with the observation, adding that executives don’t see it as a concern that buyers are going for condos based on low interest rates – that is, they don’t consider the current robustness of the market as artificial.
“I think it actually helps the high-rise condo business, especially since buying a condo in downtown Toronto is roughly $500,000 versus a low-rise house with is worth around a million bucks,” said Fenton.
Golini remarked that among the aspects they are looking at closely this year are interest rates as they affect affordability – and affordability remains the crucial factor that determines sales volume. He added that a major meltdown in the global financial market poses the biggest existential risk to the market, despite the GTA’s currently exceptional economic performance.
Another risk they are watching for is the increased difficulty in finding new land for construction, which can lead to supply and demand issues down the line. Projections state that the next two or three years might see a significant reduction in inventory as condos are expected to remain hot commodities.
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2015 has proven to be a landmark year for the condo market in Toronto, with sales volume reaching record heights and property prices increasing by an average of 4.9 per cent. 2016 is shaping up to be no different, according to three industry leaders.