While home prices
across the Greater Toronto Area continued their downward descent in the fourth
quarter of 2022, prices of condominium apartments in the region remained
resilient.
According to
the Toronto Regional Real Estate Board’s (TRREB) latest condo market report,
the average selling price in Q4 2022 was $710,520, a hair above the Q4 2021
average of $710,246. A similar trend played out on a local level, with prices
in nearly every municipality remaining relatively flat compared to a year ago.
Price
differences of less than $3K were seen in the City of Toronto, Peel Region, and
York Region. Halton Region and Durham Region experienced larger discrepancies –
prices jumped nearly $30K in the former, but were down by more than $13K in the
latter.
“On average,
the condo market segment is the most affordable,” said TRREB President Paul
Baron. “Therefore, it makes sense that we didn’t see the same type of price
adjustment, in the face of higher borrowing costs, compared to other more expensive
segments like detached homes.”
Although
prices held relatively steady, sales tumbled 54.1% annually; just 3,582 condos changed
hands across the GTA in Q4 2022, compared to 7,509 a year prior. New listings
were also down year-over-year, albeit by a more muted 14.3%, while active listings
shot up by 130.5%.
TRREB Chief
Market Analyst Jason Mercer noted that condo apartments remain an “important
segment of the market,” acting as an entry point for many first-time buyers and
serving as a vital source of rental supply across the GTA.
In stark contrast
to unwavering sale prices, average condo rents in the GTA skyrocketed in Q4
2022. One-bedroom townhouses saw the largest price increase of all unit types,
with rent rising 23.7% year over year to $2,320. One – bedroom apartments saw a
19% increase to $2,503.
The data,
courtesy of TRREB’s most recent rental market report, shows rent for bachelor
apartments rising 20.4% annually in Q4 2022 to $2,072, while rent for
two-bedroom apartments jumped 14.1% year over year to $3,178.
Only three-bedroom
apartments and townhouses didn’t experience double-digit annual rent increases,
however, they were still up 6.3% and 9.2%, respectively.
Although the
“very strong” rent growth was supported by tight market conditions, the rental
market is more balanced than it was a year ago.
Just 8,687
condo apartments were leased across the GTA in Q4 2022, an annual decline of
19.9%, while new listings dropped by 11.8% year over year. As the number of
units leased fell further than the number of units listed, TRREB noted that
renters likely had more choice than they did in Q4 2021.
Rental
demand in 2022 was driven by several key factors, including the Bank of Canada’s
incessant interest rate hikes, which impacted affordability and kept many
would-be homebuyers in the rental market. Strong population growth spurred by
record immigration and job creation also contributed.
As the BoC
has raised interest rates once since the end of 2022 – the eight hike in 10
months, bringing the overnight leading rate to 4.5% and the Government of Canada
plans to welcome 465K new permanent residents in 2023, the aforementioned
factors will continue to influence rental demand in the coming year.
“Tight
rental market conditions and strong rent increases will be the norm more often
than not for the foreseeable future. On one hand, we will continue to
experience strong rental demand in the GTA based on solid fundamentals. On the
other hand, the persistent supply shortage will continue to result in strong
competition between would-be renters, exerting upward pressure on rents,”
Mercer said.
“The
solution is no secret: we need to see new policies pointed on more supply to
translate into shovels in the ground for many years to come.”
“TRREB has
urged Toronto City Council to implement a number of changes to the Municipal
Land Transfer Tax, which they saw would increase the supply of homes for sale –
the lack thereof being the biggest source of affordability challenges – while also
providing financial relief homebuyers.”
Written
By: Zoe Demarco
Source
By: STOREYS