Market for new condos in Toronto declining, report says
Published Thursday, August 2, 2012 5:28PM EDT
Last Updated Thursday, August 2, 2012 6:00PM EDT
The market for new condos in Toronto appears to be on the wane, as the city has a record number of unsold units on its hands, a new report indicates.
Unsold units in Toronto reached a new market high at 18,123 at the end of the second quarter, according to a report released Thursday by Urbanation, which tracks the local high-rise market.
Sales of new units were also at their lowest point since the same time in 2010, down roughly 20 per cent from the first quarter, Urbanation’s Pauline Lierman said.
Although new unit sales were down 50 per cent from last year, Lierman pointed out that 2011 was a record year for the condo market, “not likely one that’s going to be broken for a very long time.”
The report also said sales over the first six months of 2012 were at the second highest on record.
The second-quarter drop in the sale of new units can be attributed to a number of things, said Sonya Gulati, a senior economist at TD.
“Number one, we’re seeing some weakness in the resale market. So a person does not necessarily want to get a new condo anymore, they might find that the resale condo is a bit cheaper,” Gulati said.
“Number two, there’s a lot of competition in the condo world, so buildings are going to have to compete for occupants as opposed to the other way around where there was just so much demand and not enough supply.”
However, the latest figures may not necessarily translate into lower condo prices just yet because supply still may not be outpacing demand, Gulati said.
“There could still be a demand for (new condos), it just means they’re not necessarily getting sold right away,” she said.
“We’re certainly expecting that supply is going to exceed demand over the next couple of years, and that’s going to mean that those price gains in those units are not going to be there anymore,” Gulati added.
However, Toronto could see the number of condo development projects slow down in the next year or so.
“I think developers sort of note to themselves that the number of projects we’re currently seeing, we’re not expecting this pace to continue going forward,” Gulati said.
Meanwhile, the Real Estate Board of Greater Vancouver on Thursday reported that residential property sales in the area remained at a 10-year low in July.