It is going to be a tale of two market segments in the Greater Toronto Area (GTA) this year, with the housing market showing signs of weak buying intentions and the commercial segment providing a more robust outlook.
Despite the rebound in new home sales last year in the GTA, fewer households seem to be interested in buying homes in the next 12 months, according to a study by Altus Group.
The increasing uncertainty surrounding the region’s economic and jobs outlook and the growing concerns on housing affordability weighed on the willingness of both renters and current homeowners to break into the market.
Despite this, the desire for homeownership remains strong amongst renters aged 45 and below. In fact, one in three Canadians in the age group said they are already saving for a down payment on a home.
The GTA was able to recover last year in terms of new home sales after hitting a 28-year low in 2018. The low interest-rate environment and the release of pent-up demand helped new home sales hit 36,500 units, close to the 10-year average.
Of the total units sold, 9,523 were single-family home sales. While the downtrend in the segment ended last year, sales continue to sit below the 10-year average.
Condominium sales, on the other hand, reached their third highest level, hitting 26,948 last year. The share of new condo sales within the City of Toronto fell but other regions became more active.
The commercial market paints an entirely different picture.
“Investor appetite for commercial properties continues to be strong, resulting in a 7% increase in overall investment property sales in 2019. New home sales fared even better, rebounding by 47% overall as both end-users and investors showed renewed interest,” said Patricia Arsenault, executive vice president of data solutions at Altus Group.
The rental apartment sector shined the brightest last year, with sales reaching $3.8bn.
The office market also delivered — the minimal new supply and the strong office demand pulled the overall vacancy rate down.
Overall, total investment property sales in the GTA hit $22.6bn last year, the second highest annual volume since 2000.