Price Gap Between Toronto Houses and Condos Hits Record High
In 2014, the market saw a huge jump in the number of newly built condos and buyers battled over a persistent shortage of houses. The average price of a low-rise home in the Toronto area hit $705,813 in 2014, up 8% from 2013, while the average price of a high-rise unit rose just 4% to $454,476, according to new data from real estate research firm RealNet Canada Inc. and the Building Industry and Land Development Association.
The gap between condos and houses grew 16% in December 2014 compared to December 2013, hitting a record of more than $251,000. (Low-rise homes consist of detached and semi-detached houses, townhomes and link homes, while high-rises encompass all condos and lofts.)
“It’s creating a bit of an extremity condition in the market,” said RealNet president George Carras. “Living in a ground-oriented home is really becoming further and further out of reach.”
The story is largely one of government policy, not of low interest rates and easy credit, Carras says. Provincial intensification and land-use policies have limited new development in the greenbelt around the GTA and encouraged more density, helping to drive up the price of new homes and increase the supply of new condos. 2014 saw a near-record number of 25,571 condo completions in the region, up from about 16,668 in 2013.
While much of the jump in condo development is concentrated in the downtown Toronto core, the price gap between the two forms of housing has been spilling outward into suburbs like Mississauga and Vaughan, where detached homes can sell for as much as $1-million and a shortage of available land has also driven development toward high-rise projects.
Despite the growing price disparity, 2014 was a good year for sales of both houses and condos, with house sales jumping 46% to 17,745 and condo sales up 38% to 21,991. After years of shrinking condos, the average unit size increased slightly last year, from 796 to 816 square feet. The average price per square foot jumped 2% to $557. Condo developers also shifted back toward building more two-bedroom condos after years of building mainly one-bedroom units. The proportion of new condos that were two bedrooms rose from 31% in 2013 to 40% last year, while one-bedroom units fell from 61% to 48%.
(Source: edited from The Globe and Mail)