The GTA new homes market is a tale of two markets: the low and high-rise markets. Each performs differently and has changed dramatically over the last decade. This was the topic discussed by a panel of BILD members at The Buildings Show on December 3.
The panel discussion was moderated by Phong Ngo, Manager of Research, Valuation and Advisory at RealNet Canada Inc., an Altus Group company, who presented the latest new home sales data, including remaining inventory and average price for the two markets.
Ngo said that as of October, 17,935 new high-rise homes and 17,117 new low-rise homes have been sold in the GTA.
Remaining inventory of new homes was 26,388 as of October 31 in the GTA. Of those, 21,408 were high-rise homes and 4,980 were low-rise homes. A decade ago, in October 2005, there were 29,852 homes for sale but they were mainly low-rise homes.
Over the last 10 years the number of homes sold annually hasn’t changed dramatically but the type of homes for sale and those under construction today is very different, said BILD Chair Steve Deveaux, Vice President at Tribute Communities.
The main reason, he explained, is that provincial land use policy mandates intensification and the lack of development-ready land with services like sewers and roads is limiting the supply of low-rise housing in the GTA.
There is a lack of serviced land ready for low-rise development in the GTA and a pressing need to get critical infrastructure, most importantly water and wastewater systems, in the ground because there is still a strong demand for these types of homes, Boaz Feiner, President of Geranium Corporation told the group.
The economic principle of supply and demand states that when demand outpaces supply, prices increase.
The average price for a new detached, semi-detached or townhome in the GTA is $802,376, as of October, and 10 years ago the average price was $387,369, according to RealNet. The average price for a high-rise home is $440,382 (October 2015) and a decade ago it was $270,852. The gap between the prices of the two housing types is widening.
On the high-rise side, projects are becoming increasingly complex and are taking longer to plan and build. Homebuyers are also taking more time deciding where they want to live, said Anson Kwok, Vice President, Sales and Marketing at Pinnacle International.
Of the high-rise homes under construction today, Ngo told the group that 86 per cent of the units are sold.