Despite the glut of condo developments expected to sprout in the next five years, a new report states Toronto’s housing market will experience a “soft landing.”
“We see a soft landing even in areas of higher risk, like Toronto. Granted, there are many condominium units under construction in Toronto, but not all will be completed at once, and the rental market, for which many are headed, is tight,” the Conference Board of Canada's report, released Wednesday, states. “The city has a decent economy and strong population growth.”
The report, entitled “Insights Into the Apartment Condominium Market in Eight Large Canadian Metropolitan Areas,” provides a breakdown of the forecasted condo activity in Quebec City, Montreal, Ottawa, Toronto, Calgary, Rdmonton, Vancouver and Victoria up to and including 2018.
For its part, Toronto is expected to see an average of $20,695 unit sales over the course of the next five years and an average of 17,619 starts per year. Both sales and starts are expected to steadily increase very slightly each year.
As for affordability, the Conference Board believes limited interest rates will keep condos within historical norms. Unsurprisingly, Vancouver remains the least affordable city.
“Across-the-board price gains will boost mortgage charges in all markets, but limited interest rate changes will combine with rising household incomes to leave affordability relatively unchanged in 2014,” the report states. “Indeed, measured as a proportion of income, carrying costs will actually fall in Toronto and Vancouver.
“Vancouver remains our report’s least affordable city, though, since these charges eat up 20 per cent of household income,” the report continues. “By contrast, this bite is forecast to remain just below 10 per cent in both Alberta cities.”