Foreign buyers not a major factor in Toronto’s new condo market
It’s no secret that the role of foreign buyers in Canadian real estate markets has been a concern for many prospective buyers.
Yet a recent survey conducted by Toronto condo research firm Urbanation found that foreign purchasers represent just 5 per cent of all condo sales in projects currently in development across the GTA, with a particular concentration in properties located in the Downtown Toronto area.
Domestic investors who will not be occupying the units represent more than half of all condo sales at over 52 per cent, which coincides with the percentage of rental units that become available upon completion of the project. That leaves a remaining 43 per cent of buyers who plan to live in the units.
While the common perception is that foreign buyers are driving already inflated prices up, the reality is that the impact of foreign buyers on the local market is quite limited compared to that of domestic investors.
Home Prices Continue to Rise
If you’ve been hoping to get in on the action of the Toronto condo market, keep hoping. The market is as hot as it’s ever been and showing no signs of cooling off.
Recent sales data from Urbanation reveals that GTA condo prices continue to increase with the average index condo price rising 2 per cent higher than a year ago at $590 per square foot.
Prices in the former City of Toronto showed a 5 per cent increase at $674 per square foot and the asking price for unsold units jumped 12 per cent to $759 per square foot. Average index prices for resale units rose 12 per cent to $511 per square foot within the GTA and $667 per square foot in the former City of Toronto.
Record Condo Sales in Q3
Even as prices continue to soar unabated, eager buyers across the GTA are snapping up condos at record rates. Fully 63 per cent of the condo units that opened for pre-sales in Q3 sold by the end of September, a record absorption rate. The latest data also indicates that Q3 sales for new condos increased by 73 per cent year-over-year, beating the previous high set in 2007.
Demand Outpacing Supply
With the staggering and ever increasing demand for inventory, supply has fallen significantly off pace. From January to September 2016, 19,917 new condo units were sold across the GTA and over the same period only 12,189 were available for pre-sales marking the widest sales-new supply divergence ever recorded.
With both the prevailing supply of inventory and new developments falling below the level of demand, the market is going to be increasingly competitive for prospective buyers.