Toronto condos have room to rise, study predicts
Report puts Toronto-area price increases at around 4 per cent
Excerpt from an article by Tony Wong - Toronto Star
Thinking of buying a condominium in the Toronto area?
For some potential buyers who remember the real estate meltdown of the 1980s, buying at the top of the market is a real fear.
Despite an unprecedented influx of supply on the market, however, Toronto condo prices have room to rise over the next five years, according to a report released yesterday. The study is more bullish than recent reports by some analysts who have called for a weaker condo market.
The Conference Board predicts the price of an average existing condominium will rise from $239,816 in 2006 to $292,077 in 2011, for an increase of about 4% annually. Resales of units in Toronto have increased for 10 consecutive years, from 7,100 in 1995 to 17,700 in 2005. The average price increase during 2006 was 5%.
The Conference Board said condo prices should increase 3.1% by the end of 2007 and average 4.2% over the following four years, for an average annual increase of close to 4%.
Experts such as independent housing analysts Will Dunning and Frank Clayton have said speculative buying in the Toronto condo market is creating the potential for oversupply in the market.
In an interview yesterday, Dunning said he expects a condominium price correction in the 5% range by mid-2007. For several years after 2007, Dunning said, condo prices will probably increase around 2% a year, in line with inflation.
Condo starts in Toronto reached a record high of 16,200 units in 2005.
Immigration, an aging population and affordability are some of the factors that will keep the Toronto condo market healthy. Toronto’s population is forecast to increase 1.9% annually to 2011.Also, average house prices have risen at a faster rate than condominiums since 2002, forcing more buyers into the high-rise market.
Still, condo starts are expected to have fallen 4.6% in 2006 and to drop another 6.3% this year, putting more balance into the market.
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