he GTA new condo market is expected to see a slow, steady rebound in sales through 2014, says market research firm Urbanation.
“I think we’re entering into a new cycle in terms of new condo sales,” says Shaun Hildebrand, senior vice president of Urbanation and a long-time market watcher. “We’re moving out of this volatile period and entering a new period of stability.”
Almost 4,300 new condos sold in the fourth quarter of 2013, the best quarter in 1½ years, Urbanation says in a state of the market assessment released Friday.
That brought total new condo sales to 13,797 for 2013, almost 1,000 more units than the market research firm had expected, but still significantly lower than the historic average of 19,000 units over the last five years, and the extraordinary 28,190 sales in 2011.
A pickup of sales in the last half of 2013, coupled with growing signs of consumer confidence, has developers gearing up for the launch of new projects, largely concentrated in the sought-after downtown core, close to transit lines.
Urbanation anticipates 15,500 sales in 2014, but largely at flatlined prices: The average square footage cost across the GTA of a new condo was $543 as of the end of 2013, up just 1.3 per cent, year over year, and significantly below the 6 per cent growth averaged each year since 2005.
Urbanation also anticipates more deals from developers keen to clear the record backlog of 19,004 unsold units that remained as of the end of 2013.
About half those suites are in projects where construction hasn’t even started, said Hildebrand. Just over 800 are actually sitting empty in buildings that are occupying or registering, while 8,130 are in projects just being built.
“I think we’re going to see a strong first half (of 2014) and a lot of project launches that generate a lot of interest,” said Hildebrand.
“Confidence is starting to improve and investors are starting to come back into the market. They are recognizing that the market hasn't crashed as so many people expected it would in 2013 and the resale market remains stable.”
Sky-high house prices, and a shortage of low-rise homes in the City of Toronto in particular, is also likely to drive more buyers to condos this year, he noted.
About 19,000 condos, 86 per cent of which were sold two or three years ago, are expected to occupy this year and about a quarter of them will be rented out by investors, as demand for new condo rentals, which hit a record last year with 19,628 rented via the MLS system alone, is expected to remain strong.
Rents are also so strong — although rent increases that have averaged 4 per cent the last couple of years slipped to 3.7 per cent in Q4 of 2013 — that investors seem to be hanging onto their units for the long-haul: Just 4 per cent put their units up for sale in 2013, says Urbanation.
Sabrina Wong, Sales Representative
Century 21 Atria Realty Inc., Brokerage