Why are central Toronto condo prices rising so fast? It’s a complicated issue but here is a summary of reasons:
- Rising immigration year to year. Currently the federal government is raising its targets by 3-6% per year; 310,000 (2018), 330,000 (2019), 340,000 (2020). In the previous decade the average was 260,000. 35% of these new immigrants end up in the GTA
- Economic growth in Canada is now approaching 3% (GDP)
- The unemployment rate is 5.7%, the lowest it has been in 40 years.
- Inflation is less than 2%
- Interest rates are still very low historically
- Provincial and Municipal governments have meddled in the condo economy to a huge extent, contributing to a shut off of new inventory.
- Historically low inventory of condos available to buy or rent
- New rent controls that discourage the development of all rental housing including condos.
- Toronto is now a world city with many international buyers and visitors eager to experience the exciting city it has become.
For all of these reasons plus a few more, it seems unlikely that prices for condos will see much relief. Bubble talk is just talk. I have heard it every year since 1998 when Toronto’s great rebuild kicked into overdrive.
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Toronto Real Estate Inventory Statistics A stat I watch weekly is resale condo inventory for the city of Toronto (Eglinton, DVP, Dufferin, Lake Ontario). This covers what I largely consider “downtown”.
Below is the history of early January inventory for the past 8 years. |
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This stat tends to predict what prices will do over the year. 713 units is a tiny supply for this region. I think this indicates significantly high prices for 2018. If a huge burst of supply doesn’t come we have some big long-term price issues. |
Maziar Moini, Broker of Record - Home Leader Realty Inc.
300 Richmond St. W., #300, Toronto, ON M5V-1X2
