Toronto condo pullback won’t stop price drop, Fitch says

TORONTO • Ontario’s condominium prices may decline as much as 10 per cent over the next few years as a record number of units under construction saturate the market, according to Fitch Ratings Inc.

At least 80,000 new multifamily units are being built in Canada’s most populous province, with the majority in Toronto, according to a Fitch report Wednesday. Once they hit the market, the units may drive down prices in what Fitch said would be a soft landing.

“Even though we’re starting to see a downtrend in starts, it’s not enough given how many units are out there waiting to come online,” Stefan Hilts, director at the service, said by phone.

Toronto’s condominium developers, who have been scaling back on new projects for the last few years, already have 100 towers in Canada’s financial capital underway. Flatlining prices may drop as much as 10 per cent, Fitch said.

Builders brought 1,436 units to market in the first quarter, a 58 per cent drop from a year earlier as units sold fell 10 per cent to 4,432, according to a report by researcher Urbanation Inc. Fitch estimates the Ontario housing market is 25 per cent overvalued, but prices won’t decline by that much, Hilts said, because one of the potential catalysts for a correction — Canadians def aulting on mortgages — is unlikely with relatively safe loans.

Several large-scale developments are in the works in Toronto, including the $560-million City of the Arts complex by the city’s waterfront and an 80-storey downtown tower proposed by Mizrahi Developments.