Toronto-area builders say a shortage of low-rise homes continues to push people into condominium apartments, which are increasing in size for the first time in years to meet the demand.
“The recent increase in high-rise prices can be attributed to the rise in average suite size, combined with a growing price per square foot,” said Brian Tuckey, president and chief executive of the Building Industry and Land Development Association, in a release. “This year we have seen the introduction of larger suites aimed at purchasers who have been priced out of the low-rise market.”
The average size of a high-rise home climbed to 809 square feet, compared to 767 square feet a year earlier. The price per square foot also rose $26 from a year ago to reach $601 per square foot, as new high-rise home sales look to be on pace for a record year.
For the first nine months of the year, 20,596 high-rise homes were sold across the Greater Toronto Area, according to Altus Group, which supplies BILD with its data. Those units accounted for almost 60 per cent of the GTA’s 34,736 new home sales as of the end of September.
Prices for both categories continue to rise. The average price of new low-rise homes — which includes detached, semi-detached and townhouses — rose more than $60,000 in just one month to reach a record $992,231 in September. Prices of low-rise homes are up 22 per cent from a year ago.
High-rise prices in the GTA also broke records in September with the average unit reaching $486,605 last month, up 10 per cent from a year ago. The average detached home sold for $1,194,771 in September.
Tuckey says the GTA’s shortage of housing supply is driving prices across the market.
“We have a serious housing supply challenge in the GTA due to a significant shortage of shovel-ready land and long and uncertain project approval timelines,” he said. “These factors are severely restricting the number of new homes being brought to market and are causing prices to surge month after month.”
The supply of new homes available to purchase has dropped by 10,000 in a year. There were 15,421 new homes and condominiums available for purchase in September across the GTA, which compares with 25,848 a year ago.
Low-rise supply increased from August but the 1,604 homes available last month for sale still represented a 64 per cent decline from a year ago, with the monthly increase attributed to a typical launch of product for September.
In all, there were just 764 detached homes available for sale across the region in September, less than a month’s supply based on current sales trends.
Patricia Arsenault, executive vice-president of research consulting services at Altus Data Solutions, said new low-rise home sales year-to-date in the GTA are very similar to the situation back in 2009, before house prices started to take off.
“What has changed dramatically is the decline in options available to buyers. Back in 2009, there were nine low-rise homes available to purchase for every home sold. Now that ratio is less than two to one. Given the sharp drop in competitive product alongside buoyant buyer interest, it’s no surprise that new low-rise home prices have doubled since 2009,” she said.