GTA New Condo Sales Reach Record High in Q1
Urbanation Inc., the leading source of information and analysis on the condominium market since 1981, released recently its Q1-2022 Condominium Market Survey results.
Greater Toronto Area (GTA) new condominium sales reached their highest Q1 on record with 8,253 units sold, rising 55% year-over-year and exceeding the 10-year average (5,154 sales) by 60%. A record high 94% share of total new condos in development were pre-sold as of Q1-2022, pushing unsold inventory down to an 18-quarter low of 8,726 units. New condominium demand has been far outweighing supply during the past two quarters, as total sales exceeded the total number of units launched for presale by 4,417 units, resulting in a six-month plunge of 34% for unsold inventory. The 3.1 months of supply on the market in Q1-2022 represented a record low for the GTA new condo market, which coincided with a 16% year-over-year increase in average unsold prices to a new high of $1,381 psf.
Despite the strength in pre-sale demand, the level of construction activity underway in the GTA declined for the first time in two years from a high of 88,773 units in Q4-2021 to 86,766 units in Q1-2022 as construction costs rose faster than selling prices and resource constraints tightened.
Projects in the former City of Toronto continued to record the slowest rate of price appreciation, suggesting some resistance levels in the market are being met. Over the past year, new condo prices in the former City of Toronto, which are highest in the GTA at an average of $1,637 psf, increased by 14%. By comparison, prices in the outer-416 markets (Etobicoke, North York and Scarborough) and 905 region of the GTA both recorded annual price growth of 23%, reaching averages of $1,244 psf and $1,073 psf in Q1-2022, respectively.
Over the last four quarters, the share of GTA new condo sales located in the former City of Toronto fell to a record low 29%, down from a 45% share five years earlier and a 52% share 10 years ago.
In the resale market, average per square foot condo prices increased by 12.7% between the fourth quarter of 2021 and the first quarter of 2022 — the fastest three-month price increase on record as buyers took advantage of the end of record low interest rates. This sent average resale prices 19.5% higher than a year ago to $986 psf ($811,000 for 823 sf), which was 24% above the pre-pandemic average in Q1-2020. Similar to the new condo market, resale condo price appreciation was strongest outside the core, with 905 region prices increasing at twice the annual pace of the former City of Toronto (27.8% versus 13.7%) and the outer-416 trailing close behind with 21.6% annual price growth. With average GTA resale prices surpassing $800,000 in Q1-2022 for the first time, buyers were focused on areas of the market offering relative value such as the outer 416 and 905 regions averaging prices of $766,000 and $761,000, respectively.
“The GTA new condo market put up a record breaking performance in the first quarter, but faces a challenging environment ahead. With construction costs rising faster than prices, labour constraints and supply chain issues, and new inclusionary zoning policy and large development charge increases on the horizon, expect developers to begin scaling back on new launches in the second half of the year. This reduction in supply should support condo prices while demand moderates as interest rates rise."
--Shaun Hildebrand, President of Urbanation
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