27 March 2019

“Weaker new condominium sales could be partially explained by sharply growing prices during the previous two years, which pushed many potential buyers out of the market”, – says Patricia Arsenault, executive vice president of data solutions at Altus Group.

Last month, the average cost of a new condo was $792,709, which is 8.6% higher than a year ago. It exceeds the amount homebuyers pay on average for units on the resale market, which is also facing higher prices and lower sales. The Toronto Real Estate Board says the average sale price of a condo last month was up by 6.1% annually to $552,161. At the same time, resale transactions were down by 5.7% during the same period.

RBC study shows that a typical Toronto household would need to spend almost half of its income to afford the average condo in the GTA last quarter. The calculations were based on a 25% downpayment for a 25-year mortgage with a five-year fixed rate. It also included monthly payments, property taxes and utilities.

Ontario Ministry of Finance expects the GTA’s population to reach 9.7 million by 2041, while in 2016 it was 6.4 million.

While some potential buyers have been left out of the market and others decided to wait, the supply of new condos has been growing. At the end of February, there were 11,269 new condo units for sale, following 10,364 reported in January. Arsenault says homebuyers will benefit from this tendency.

“Although the supply remains relatively low from historical point of view, there are more units for sale today, and this growth weakens the prices increase”, – Arsenault added.