Metropolitan Toronto Condo Outlook

2012-11-20 | 10:24:34

Written by Genworth

Unit sales in Toronto’s resale market are forecast to

fall by 1.2 per cent in 2012, in line with modest

economic growth and federal efforts to calm overheated

markets. Starts in the new market will drop 2.2 per

cent, even after hitting record levels in the first quarter.

A new land transfer tax and the global recession ended an

impressive string of growth in Toronto’s resale apartment

condominium market in 2008. Unit sales fell 15.7 per

cent that year, while median price growth slowed to 4 per

cent. Demand accelerated again in 2009 and 2010 as the

economy recovered, pushing sales up by nearly 19 per

cent over the two years. The resulting increase in the

sales-to-active-listings ratio, to 41.9 per cent—its highest

level in nine years—then sparked growth in median

apartment prices of 6 per cent in 2009 and 10.2 per cent

in 2010.

In spite of weaker economic growth, continued low

interest rates kept demand in the resale apartment condominium

market strong through much of last year as

well. Sales increased 5.6 per cent in 2011, to just under

23,000 units, while the median apartment price increased

by 7.4 per cent, topping $300,000 for the first time. But

with economic growth remaining modest and with the

federal government introducing tighter mortgage rules,

sales are forecast to fall 1.2 per cent this year and rise

by only 0.7 per cent in 2013. In turn, continued declines

in the sales-to-active-listings ratio will hold price increases

to 1.3 per cent this year and 2.5 per cent next year.

Through the medium term, stronger economic growth

and continued healthy population increases will initially

help to boost unit sales once more, up by 2.5 per cent in

2014. But higher interest rates are then expected to take

their toll on demand, slowing sales growth to 2 per cent