Condo construction starts during the second quarter of this year set a record.
Those 7,981 units are part of 63,903 total units under construction in the Greater Toronto Area, of which 95% were presold, according to Urbanation. However, new condo sales declined 56% in Q2 of 2018 over the same period last year, to 4,977 units, as new project openings slowed down.
Last year set a record for new condo activity. To illustrate this year’s shortfall, the 9,058 sales during the first half of 2018 are down 58% from 2017’s 21,316, and 13% below the 10-year first-half average of 10,471. Urbanation speculates that preconstruction buyers are chary after last year’s exorbitant prices for new condominium apartments, as well as the slower price appreciation in the resale condo market.
Moreover, because new condo sales are largely driven by investors, their interest appears to be waning and that’s impelled developers to launch fewer sites. In fact, launch sites declined 51% in Q2 over the same period in 2017, and that’s kept inventory low and prices steady at last year’s levels.
“Fewer new preconstruction condo sales this year will help keep the supply pipeline in check as construction starts and completions move to new highs over the next couple of years,” said Shaun Hildebrand, Urbanation’s president. “Ultimately, low unsold inventory and a stabilizing resale market will provide support for the new condo market in the second half of 2018.”
Volume in the resale market for condos dropped 17% in Q2 year-over-year, however, that’s an improvement over the 31% drop during Q1. The 6,019 resales in the second quarter represent a 5% hike over the 10-year Q2 average of 5,708 sales.
According to REMAX Hallmark broker Jasmine Lee, condos priced $650,000 and above have been staying on the market longer and tend to sell below asking.
However, everything below that price point either sells for asking or above asking.
“I find that one-plus-ones without parking move easier because parking drives prices up,” said Lee. “New developments are getting a lot of interest, as opposed to freehold detached properties, because people are priced out of the market.”
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