TORONTO — New home sales sank to their lowest level in almost two decades in Toronto last year driven by a drop in new condominium sales, a pair of reports say.
More than 25,000 new homes were sold in the Greater Toronto Area in 2018, according to data from the Altus Group Ltd. That’s the lowest number since it started tracking sales in 2000.
New condominium sales fell 38 per cent to 21,330, while new single-family home sales plunged 50 per cent to 3,841.
More stringent mortgage stress testing, rising interest rates and a lack of affordable single-family housing all played a role in the drop, said Patricia Arsenault, executive vice-president data solutions.
The average price of new single-family homes fell 6.7 per cent to $1,143,505 in December while condo prices rose 11 per cent to $796,815.
David Wilkes, CEO of the Building Industry and Land Development Association, believes the market is out of balance.
“We join other industry groups in calling on the federal government to revisit the stress test and allow a longer amortization period for first-time buyers. And we look forward to working with our municipal partners on removing barriers to development such as excessive red tape and outdated bylaws.”
New condo sales slumped 31 per cent in the fourth quarter to 6,040 from a record 8,816 in the same period of 2017, according to real estate consulting firm Urbanation Inc.
It added that the number of resale condominium transactions in 2018 declined for a second consecutive year to 20,121 units, a drop of 16 per cent.
With 24,347 units available for sale last year, new supply outpaced demand for the first time in five years. Urbanation says a 29 per cent increase in unsold new condos in development in 2019 will limit price growth.
Resale prices increased by an average of 7.3 per cent on a per square foot basis, down from a 26.1 per cent increase in 2017, marking a move to normalization after unprecedented activity, said Urbanation president Shaun Hildebrand.
“Overall, market fundamentals continue to support current sales levels and prices, although greater caution should be exercised with respect to investing in new units, particularly over a short-term time horizon, as current trends are pointing towards slower appreciation going forward.”
The Canadian Press