Elevated housing prices kept the apartment segment near the top of Toronto home buyers’ preferences so far this year, according to a new report by real estate investment services company Marcus & Millichap.
The firm’s “July 2018 Toronto Multi-family Spotlight” report noted that apartments for both residential and commercial use have exhibited continuous activity despite regulatory changes.
“Rent controls put in place recently have yet to slow investor demand or rent growth as was previously feared. Strong rental demand and improving property performance will keep sales activity elevated this year, particularly in areas near employment hubs with transit connectivity,” according to the study.
“Prices climbed 17% on strong buyer demand to an average of $256,800 per unit for properties traded over the past year. Assets in the city of Toronto changed hands at $318,300 per unit,” the report added.
In particular, high down payment costs have pressured many first-time home buyers towards the apartment segment.
“With a limited number of starter homes on the market, apartment demand has held exceptionally strong, lifting rents more than 5% last year while keeping the vacancy rate near 1%, motivating developers to increase activity,” the study explained. “More than 7,000 apartments were underway at midyear, the highest level in more than 20 years.”
Read more: GTA leads way in July
Multi-family properties have emerged as a preferred choice among Toronto home buyers squeezed by ever-increasing prices in the city’s detached segment.
Recently, the sales volume of GTA’s condos has continuously outpaced that of single-family homes, according to the Building Industry and Land Development Association.
BILD reported that despite the benchmark price growing by 23.5% year-over-year (up to $774,554) in June, condo units in Toronto’s low-, medium-, and high-rises accounted for 2,079 new home sales, compared to the month’s total of 2,500.
“The relative strength of condo apartment sales is an indication of the state of the market,” BILD president and CEO David Wilkes said.
“The cost of new homes in the GTA, both condos and single-family homes, is affected by government regulation and red tape that slows down the building of new supply, and by government fees, taxes, and charges, which can account for almost a quarter of the cost of a new home.”
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