2019 was a record year for new condo sales in the Greater Toronto Area (GTA), growing 27% to an impressive total of 25,097 units sold, the third-highest year on record, according to Urbanation Inc.'s year-end condominium market report.
The report, which was released Monday, revealed new condo activity surged in Q4-2019 with 8,044 units sold, up 38% than the same period a year ago, and nearly matching the record high set in Q4-2017 when 8,755 units sold.
Urbanation, a leading source of information and analysis on the GTA condominium market, says a 75% share of the 23,953 units brought to the pre-sale market by developers in 2019 were sold -- up from a 63% share of new launches in 2018 -- averaging a selling price of $967 per-square-foot, a 4.7% increase from 2018.
In contrast, unsold condos at the end of 2019 decreased by 4.8% to 13,373 units to remain below the 10-year average of 15,907.
Despite the current demand for new condos in the GTA, inventory fell to 6.4 months of supply, which Urbanation says is substantially below what is considered to be a balanced level at 10 months. As a result, pricing for the available units climbed to a record-high $1,073 per-square-foot, a 9% annual increase that followed a 50% two-year increase between 2016 and 2018, which led to a doubling of new condo prices over the past ten years.
Graph courtesy of Urbanation
A total of 18,232 units from development projects that launched in 2019 were sold, up 17% compared to new launches sold in 2018.
And while this does serve as a good indicator of growth in demand from investors, who tend to be most common within newly launched projects, Urbanation says sales within pre-existing development projects that launched prior to 2019 grew even stronger with a 70% jump to 6,865 units, providing evidence of a rebound in demand from end-user buyers as well.
By region, the 905-area saw the strongest growth last year, accounting for 42% of all sales in 2019, up from 32% in 2018. New condo launches in the 905 averaged a selling price of $795 per-square-foot, which was 28% below the 416 average of $1,108.
However, it was the old City of Toronto that saw new condo sales drop in 2019, falling 15% to their lowest level since 2013.
Furthermore, new condo sales in the old City of Toronto recorded their lowest share of GTA sales on record at 31%, which Urbanation says provides a "clear illustration of how the diminishing number of high-rise development sites are impacting prices in the core and the distribution of activity across the GTA."
Pauline Lierman, Director of Market Research at Urbanation, told Toronto Storeys there were two factors that affected this market: the number of sales in the 905-region and the lack of new launches in the former City of Toronto.
According to Lierman, in 2019, 25 developments opened in the former City with a total of 5,255 units. By comparison, 2018 saw 37 projects launch with 11,062 units, and in 2017 there were 39 projects launched with 14,277 units.
"Overall, there is less new opening activity in the former City to feed sales than in the last two years. You would expect fall off from the market peak of 2017; however, factoring in the comparatively slower 2018, logic would see a rise in 2019 for new launch activity," said Lierman.
"This is where the 905 comes in, and to a lesser extent, the outer 416 former municipalities for the second factor, which is price-driven. The downtown market now averages around $1,300 per-square-f00t, whereas prime 905 markets are now between $800 to $900 per-square-foot."
When looking at activity in the GTA's submarkets, the report highlighted the city centres of Vaughan and Mississauga, which saw a combined 4,172 sales in newly launched projects in 2019, averaging nearly identical selling prices of $834 and $857 per-square-foot, respectively.
Within the 416, the top submarkets were North Midtown (Yonge and Eglinton), Downsview, and Downtown East, which together sold 2,757 units in new launches that averaged selling prices between $931 and $1,230 per-square-foot.
As we head into 2020, Urbanation predicts the level of condo completions will be an important factor for the GTA market this year.
After years of low completions and strong construction starts, the number of units under construction at year-end 2019 soared to a record 78,112 units — rising by more than 20,000 units over the past two years.
According to Urbanation, there are approximately 29,500 condo units scheduled to be completed this year, not only doubling the level completed in 2018 but also far surpassing the previous high set in 2014 when 21,000 units were completed.