Toronto remains a renter’s market, despite elevated condo prices

The condominium market research company said rents are up just 1.1% annually in the rental condominium market for the first quarter of 2011 compared to last year. Yet the cost of buying a new condominium apartment rose 8.4%, while the cost of a resale condo rose 2.5% over the same period.

“Because Urbanation expects a record year for condominium apartment registrations in 2011, that additional supply is expected to keep prices from escalating,” said the report.

Investors buy an estimated 45% to 60% of all new condominiums in Toronto, according to Urbanation. Those new investors are no doubt expecting rents eventually start to catch up with the rising sale prices.

The Toronto Real Estate Board (TREB) also released similar statistics this week showing the price gains of condo apartments were highest outside of the city.

The average condo price in the City of Toronto cost $356,452 in the first two weeks of May, up 1% from a year earlier. Meanwhile, the average price in the rest of the Greater Toronto Area (GTA), which TREB labels the “905,” saw prices rise 8% to an average of $269,180.

TREB also reported sales were down considerably in both the city and outlying communities this month, down 12% and 7% respectively over last year.

Meanwhile, detached home prices were up even more in Toronto. The City of Toronto’s average price for a detached home in the first two weeks of May was up 13% over last year to reach $774,046. The rest of the GTA saw prices rise 9% to an average of $534,666.

“The average home selling price has been growing at a faster rate over the last two months,” said Jason Mercer, TREB’s senior manager of market analysis.

“This is not surprising given the number of homes available for sale has been down substantially in comparison to 2010. Increase competition between buyers for available listings has prompted enhanced upward pressure on home prices.”

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