Toronto hit a decades-old record for unsold condo units this January, as supply continues skyrocket. But what will this mean for prices and the health of the housing market as a whole?
“Most of the completed units are presold, but the increase still lifted the number of unsold units to a 21-year high (1602),” Sal Guatieri, senior economist for BMO wrote in his latest economic report, released Tuesday. “This will slow the increase in new condo prices (3.7% y/y in Q4). However, as long as demand remains healthy (last year was the third best on record), prices should hold steady.”
10,368 condos were completed in the GTA in January, a record for the region and eight times more than the average over the past decade.
“Construction delays had builders playing catch up with the record number of multiple-unit dwellings started in 2012 (37,406 versus the past-decade norm of around 25,000 and last year’s 20,099),” Guatieri wrote. “That, in turn, was a response to the record number of new condos sold in 2011 (28,190).”
The oversupply of units is in contrast to the Toronto Real Estate Board’s recent analysis.
“Despite very strong condominium apartment completions over the last two years, we have not experienced a glut in inventory,” Jason Mercer, TREB’s Director of Market Analysis said in a mid-January release. “The number of buyers has more than kept up with the number of units available for sale. This is why we continued to experience above-inflation average price growth in the condo segment.”
This slight slump comes after a healthy year for Toronto condo sales in 2014.
Last year saw 21,913 overall sales, up 10.2 per cent year-over-year, and the total dollar volume increased 15.9 per cent year-over-year to $7,928,920,000.
The average price in 2014 also saw an increase, with the average unit price coming in at $361,836 – a 5.2 per cent year-over-year hike.