New rules having little impact on builders
New townhouses price passes $1M mark in Toronto
TORONTO — Builders in Canada’s largest city maintain they have been unaffected by Ontario measures to cool the market and say the average selling price of a new townhouse in the Greater Toronto Area crossed $1 million for the first time at the end of May.
The Building Industry and Land Development Association said Friday the average available low-rise detached home cost $1,222,699 at the end of last month, a 40 per cent increase from a year ago, but only up $10,000 from April numbers.
“For the new homes market, the province’s fair housing plan has had little real effect,” Bryan Tuckey, chief executive of BILD, said in a statement. “Prices continue to increase and supply, especially for single-family low-rise homes, continues to be low. The price acceleration in the condo portion of the market is especially worrisome since it not only represents the lion’s share of new housing in the GTA, it’s also making it difficult for condos to remain the affordable option.”
On April 20, the Ontario government introduced 16 measures to cool the housing market, including a 15 per cent non-resident speculation tax on homes in the Greater Golden Horseshoe and expanded rent control rules for the whole province.
While prices are still soaring in the new homes market compared to a year ago, BILD’s own release shows the gains are shrinking. The $10,000 increase in low-rise prices amounted to a less than a one per cent increase from a month ago. Nevertheless, gains in the new home market compare to declines that are happening in existing homes market where average prices have dropped 12.1 per cent when comparing the first two weeks of June to the average price at the end of April, the Toronto Real Estate Board reported.
Doug Porter, chief economist with the Bank of Montreal, said price changes based on market conditions tend to happen a little more slowly in the new homes market because you have a different set of sellers, namely builders.
“In general, new home prices can be a little more sticky and stable,” he said. “The seller is a stronger entity and less affected by shortterm moves in the market.”
BILD said 3,902 new homes sold last month, down sharply from the 6,052 sales a year earlier, and down from the 4,680 units sold in April. New multi-family homes, condo apartments in high-rise and midrise buildings and stacked townhomes drove the market and accounted for 86 per cent of activity in May.
Much as in the existing homes market, the condo sector continues to be strong as consumers look for cheaper alternatives to detached homes. There were 3,357 sales of new condos in May, down slightly from a year ago but 61 per cent above the 10-year average for the month. By comparison, the 545 sales of new single-family low-rise homes in May was a 76 per cent decline from a year ago and 68 per cent below the 10-year average for May.
The average price of available new condo apartments rose $30,000 from April to $604,683 in May and was up 33 per cent from a year ago. On a per-square-foot basis, the average condominium was $743, up from $573 a square foot a year ago.
The average asking price for an available detached home was $1,942,316 in May, up from $1,810,232 in April. The average price for an available townhomes was $1,002,220, up from $964,496 a month earlier.
BILD did say the number of homes available to buyers in builders’ inventories at the end of the month rose to 10,820, up increase from 9,387 a year ago but well below the 19,209 a year ago. At the end of May 2006, there were 29,754 new homes in builders’ inventories.
“The combination of lower sales, some increase in inventory and slower price growth in May compared to April was the first hint we have had of some hesitation among potential buyers of single-family homes,” said Patricia Arsenault, executive vice president of research consulting services with Altus Group. “But in the condominium apartment sector, it was still full steam ahead in May. Sales were steady and prices posted strong increases, meaning the increase in available inventory in May was not due to wavering demand but rather the burst in new condo project openings.”
In general, new home prices can be a little more sticky and stable.” Doug Porter, chief economist with the Bank of Montreal