Posted by Sidra Sack on January 30, 2016 | Uncategorised | 0
Investors made a bigger splash than ever before in the Greater Toronto Area’s residential real estate market last year. In fact, purchases in this segment of the market totalled a cool $4.2 billion in 2015, the highest total recorded in any year and a 49 per cent surge over what was seen in 2014, according to Altus Group’s 2015 Real Estate Review.
Peter Norman, vice president and chief economist of Altus, a real estate services firm, says in a statement that this activity suggests “continued levels of strong industry confidence in the prospects for residential development.”
“While the overall Canadian economy faces headwinds, the GTA economy is picking up steam and this is clearly reflected by the 2015 data on residential land sales, low and high rise new home sales and, of course, in the level of resulting construction.”
Broken down, investment in low and high-density developments was equal, with deals in each of these corners of the market accounting for $1.7 billion, a record for both. “The classification of the asset trades are based on intended use at the time of sale,” explains Daniella D’Alimonte, a spokesperson for Altus Group. This means that some of the properties counting towards this total could have been retail or office space, so long as developers had stated intentions of using lots for housing purposes when they purchased them.
Moving forward, Norman, the economist, stated the market for low-rise dwellings is “one to watch for 2016 as new development lands come on stream, sales pick up and single-family housing starts continue to recover from a long drought.”
The level of sales and prices for newly constructed low-rise homes — including detached homes, semi-detached homes, and townhouses — shot up in the past year, according to new data from RealNet, an analytics company that Altus owns.
New low-rise home sales in the GTA equalled 19,637 in 2015, an 8 per cent increase over last year, while the average price for these abodes reached $829,766, up 18 per cent from where it sat at the end of 2014.
Unsurprisingly, newly constructed high-rise units were the cheaper option for investors. These homes went for an average price of $453,083 in December 2015, down 3 per cent from the same month one year earlier.
Sales of these condos also ebbed, with 21,658 high-rise units selling across the GTA in 2015, which is 2 per cent lower than activity tracked in this segment of the market the year before.
Norman attributed the price disparity between low and high-rise housing to the “continued degree of pent-up demand for low rise homes in the GTA, and the still-tight conditions on residential land.”