While the low-rise real estate market continues a steep decline, the condominium apartment sector is facing a similar drop in sales with prices continuing to rise faster than the rate of inflation, according to a new report.
In the latest market update from the Toronto Regional Real Estate Board (TRREB), second-quarter sales in the condominium apartment market declined by 35.2 per cent to 5,687 when compared to the same period in 2021. Compounding the issue, listings remained flat at 14,316, which translates to more choices on the market for buyers.
“While some would-be first-time buyers have temporarily focused on renting as they sit on the sidelines, the less expensive entry prices of condos versus freehold homes has provided an alternative option for purchasers looking to mitigate the impact of higher borrowing costs,” said Toronto Regional Real Estate Board (TRREB) President Kevin Crigger. “The lower average price point in the condo segment has performed better than many low-rise segments of the market since the onset of the Bank of Canada rate hikes in the spring,”
While there are more condominium apartments on the market, prices have continued to rise year-over-year to $769,999 — a 12.2 per cent increase. According to TRREB, the strongest price growth is in suburban areas outside the 416.
“Condo market conditions became more balanced in the second quarter, with buyers benefitting from substantially more choice. However, the pace of annual average price growth remained above the rate of inflation, particularly in areas outside of Toronto that are offering attractive price points,” said Jason Mercer, chief market analyst for TRREB.
Current tight market conditions continue to make it tough for renters. According to TRREB, average rents for one-bedroom (up 20.2 per cent to $2,269) and two-bedroom apartments (up 15.4 per cent to $2,979) are now both at record levels, surpassing the previous peak in the third quarter of 2019.
“Competition between renters continues to heat up, resulting in extremely strong upward pressure on average rents. Rental supply remains a major issue in the GTA and will become more pronounced in the short term, as an increasing share of well-employed individuals turn to the rental market,” said Mercer. “Policymakers need to develop a diversity of options to bring more rental supply online, whether we’re talking about investor-held condominium apartments or purpose-built rental developments.”