Equal demand for condos and houses
The GTA housing market is complex and dynamic and it really is a tale of two markets: the lowrise and the highrise markets. Both are robust in the GTA but over the last decade the markets have been affected by provincial land use policy in different ways.
The GTA is growing fast. It expands by nearly 100,000 people each year and all those people need homes. The land development and home building industry builds new homes to meet the housing needs that growth creates. Although the number of homes built has remained pretty constant — about 35,000 per year — what has shifted is the types of homes being built.
A decade ago, about 75 per cent of the new homes sold in the GTA were lowrise and 25 per cent were highrise. By 2011, the markets had flipped. Of the new homes purchased that year, 75 per cent were in highrise condominiums. Since then, the two markets have levelled out.
Ten years ago the provincial government introduced policies intended to protect significant agricultural land and green space and shape how and where our region grows. These policies require more development to occur within established areas such as downtowns and they mandate new developments use less land to accommodate more people and jobs.
The new-home industry has met the challenges of these policies and is building up instead of out.
Today the industry is building more highrise condominiums and fewer lowrise homes than it did 10 years ago. However, the demand for townhomes, detached and semidetached homes has not diminished and it is outpacing supply.
Last month there were 1,102 new lowrise homes sold in the GTA and the average price climbed to a record-setting $811,579. This is 18 per cent higher than the average price in September 2014 and prices have tripled since September 2005 when the average was $386,188.
The growth of prices for townhomes, detached and semi-detached homes is a simple case of supply and demand. There is consumer demand for these types of homes but supply is limited, which is driving up prices. The constraint in supply is due to a lack of serviced land designated for development.
The industry continues to innovate and provide consumers with affordable choices. Developers building condominiums in the GTA have been finding creative ways to maximize living space and reduce the suite size to make them more affordable for new-home buyers.
In September there were 1,079 new condominium suites sold in the GTA and the average price was $441,000. The price has been decreasing slightly over the last few months as the size of condominium suites become smaller, but the price per square foot continues to rise. Bryan Tuckey is president and CEO of the Building Industry and Land Development Association and a land-use planner. Follow him at twitter.com/ bildgta, facebook.com/bildgta, and bildblogs.ca.