Condos have long been seen as a relatively affordable point of entry into the home ownership market. But the latest figures from the Toronto Real Estate Board show that condo prices aren’t getting any cheaper.
TREB released its condo market figures report on Monday, which revealed that the average price of a condo in the city of Toronto rose 8.9% from $549,927 in the fourth quarter of 2017, to $598,664 in the fourth quarter of 2018.
The average price for all condos in the GTA increased by 8.3% from $516,086 in the fourth quarter of 2017, to $558,728 in the fourth quarter of 2018. Sales of condo units, however, fell 9.9% in the fourth quarter from a year earlier.
“The condominium apartment segment was the best-performing segment in terms of annual average rates of price growth in 2018,” said TREB president Garry Bhaura in a news release.
“Condos represent a relatively affordable housing option. With a substantial decrease in listings in 2018, competition between intending buyers remained strong. This supported average price growth well-above the rate of inflation and annual rates of price growth reported for other ground-oriented home types.”
Costs are also rising in much of the rental condominium apartment sector.
TREB’s data shows that the average cost of rent for a bachelor apartment increased by 9% in the fourth quarter of 2018 from the year before. The average rent of a bachelor apartment in Q4 2018 was $1,821.
Rent for one-bedroom apartments also saw an increase, of 8.8% in the fourth quarter from the year before, bringing the average rent to $2,143 in Q4. Tthe average cost of two-bedroom apartments rent rose 5.5% year-over-year. A two-bedroom apartment cost $2,774 on average to rent in Q4 2018.
Three-bedrooms, on the other hand, saw a 4.5% decrease in average rent, from $3,524 to $3,366 year over year.
Urbanation reported that the annual income needed to afford a Toronto condo last year was $100,000. If you live downtown, that number rose to $125,000.
While the average price of a condo rose in the fourth quarter of 2018, experts have predicted condo price growth to moderate in 2019.
“We’re entering right now, the beginning of what will be a record run of condo completions so that’s going to help slow down price growth and rents,” said Shaun Hildebrand, senior vice-president of market research company Urbanation, in an interview with the Toronto Star.
TREB’s Director of Market Analysis, Jason Mercer, said it will be important to monitor the supply of rental condominium apartments, especially given the recent rent control exemptions announced by the provincial government last November.
“... this change does not benefit all investor-owners of condominium apartments, who have provided much of the new rental stock over the past decade,” Mercer said in a news release.
“It is conceivable that rent controls could prompt some investors to consider selling their units and investing the proceeds in another asset class. This scenario could obviously compound an already problematic rental supply issue in the GTA.”