Toronto condo prices might hit a ceiling soon.

When Toronto’s market began correcting in 2017, it appeared someone forgot to tell the condo market. Sales and prices soldiered on upwards, while the low-rise market languished — but the soaring performance of the high-rise segment could be winding down, suggests realtor John Pasalis.

Pasalis, whose research work has been cited by the Bank of Canada, outlines what he says is behind slackening sales, which are down nominally for the first five months of this year when compared to the same period in 2018.

“What’s the cause of this cooling in demand for condos? High prices,” writes Pasalis, also the president of the Toronto-based Realosophy brokerage, in a blog post.

“More specifically, the fact that condo prices have been rising while low-rise prices have been trending down — condos are starting to look a bit expensive relative to detached and semi-detached houses,” he explains.

According to May home sales data from the Toronto Real Estate Board, the average price of condo apartment is $590,876 compared to $1,042,218 for a detached home. While the difference in price is no small amount, it’s less pronounced than it was at the height of the market, Pasalis notes.

The Toronto housing market peaked in March 2017, and when it did, the gap between condo prices and detached home prices was a lofty $700,000. As of May, the price gap narrowed to $450,000, according to Pasalis’ calculations.

Over that two-plus-year period, condo-apartment prices increased 14 percent, while row house and condo townhouse values are approximately flat.

The new-condo segment is already seeing more muted gains. In April, the average asking price for an available new condo was $758,585, an increase of 2.5 percent from a year earlier, according to the Building Industry and Land Development Association.

So what’s the upshot of all this?

“The supply for condos is still relatively tight which is keeping prices up, but if we continue to see a cooling in the demand for condos, we may see condo prices hit a plateau,” Pasalis concludes.

For now, listings remain down from a year ago. At the end of May, there were 3,806 condos listed on the market in the GTA, down from 3,993 in May 2018.