Prices to soar in absence of cohesive housing policy

Detached home prices in the GTA are poised to grow at double-digit rates in 2017.

Prices for all housing types have been hitting record-breaking levels on a monthly basis across the GTA. But detached-home price growth has outpaced condominium price growth by a ratio of approximately two-to-one. Detached-home prices in 2016 have on average have grown by 20-per-cent annually, while condo prices have grown by 8.7 per cent, according to the Toronto Real Estate Board.

And while the more expensive detached homes are located in the 416 — with an average price in October of $1,303,339, versus $948,191 in the 905 — it is detached homes in the 905 that are witnessing the greatest price increases on a relative basis, growing 22.1 per cent year over year in 2016, compared with 17.8-per-cent price growth in the 416.

Markets respond to forces of supply and demand, but they also operate within a policy framework estab- lished by multiple levels of government. With population growth in the GTA estimated to be 108,766 per year up to 2019, demand for new housing will remain strong.

New-condo sales are on pace to hit an all-time high this year, with more than 25,000 units purchased in the GTA. And projections from Altus Group anticipate 20,000 high-density units will be sold per year over the next three to four years. So we can expect a healthy supply of new high-density units in the region.

Upcoming changes to the provincial growth plan will increase intensification targets for GTA municipalities from 40 per cent to 60 per cent, resulting in more highdensity housing and less groundoriented development.

In an attempt to address a lack of affordable housing in the region, new legislation referred to as inclusionary zoning will require that residential developments dedicate a portion (5 to 10 per cent) of their units as affordable. That may help alleviate concerns, but the related costs to the builder of supplying those affordable units simply will be added to the price of the marketrate condo units, creating new challenges when it comes to housing affordability.

Changes to the Condominium Act (Bill 106) that are coming into effect in 2017 promise to further complicate the new-condominium purchasing process and may end up causing a shift in high-density development away from condos and toward more purpose-built rental apartments.

The truth is that no one is really in charge of the housing market. Making matters worse, unco-ordinated and unaligned policy and legislative changes from different levels of government will likely turn the GTA housing market into a pinata — batted around from all sides.

We’re currently awaiting recommendations from the multi-level government housing task force. But it’s tough to feel hopeful that solutions to the housing problems we face will come from some of the same minds that helped create them in the first place.

is the president of RealStrategies Inc. and the founder of RealNet Canada Inc. (now part of Altus Group). His column appears in New in Homes & Condos once a month. For more information, visit realstrategies.ca