Sales for newly-built condos reached record highs in the areas surrounding Toronto, even as high land and development costs, investor fatigue and delays for planning approvals slowed sales in Toronto proper to their slowest pace in years.
The second quarter of 2019 saw sales grow by nearly 150% in the 905 region, which includes Hamilton, Halton, Peel, York, Durham, the Niagara Peninsula and parts of Northumberland County. That represents a stunning 58% of overall sales in the Greater Toronto Area (GTA), according to a report released Thursday by market research firm Urbanation, which noted that this is a record for the region.
The 416 region didn’t do badly either, with Scarborough, Etobicoke and North York logging 2,093 new condo sales in the second quarter. This is double the number of new units that the region sold in the same period in 2018.
Toronto, on the other hand, saw sales drop by 12% year-over-year. Only 1,682 new condo units sold — the lowest second quarter total for the market since 2009. Toronto sales only accounted for 19% of overall transactions in the GTA.
GTA condos that went on the market in the second quarter sold for an average of $903 per square feet, but the remaining inventory — meaning everything listed before Q2 but that was still on the market that quarter — reached $1,000 for the first time, said Urbanation, marking a 9% increase from the second quarter of 2019. It’s possible more of these units were higher-end condos, as more expensive properties often take longer to sell.
Why are the regions surrounding Toronto selling so many more new condo units? The answer, said Urbanation, might lie in population growth, record low borrowing costs and a robust job market. In addition, nearly every project that launched for pre-sale in the second quarter had secured planning approval, making it far less likely for projects to get cancelled. (Many projects are forced to stop development when they aren’t able to secure the proper city permits for building.)
While Toronto also benefits from some of these factors, it faces several challenges that are common to larger cities. These include higher building costs, fatigue from investors regarding high-priced projects in the downtown core, and more challenges securing approvals.