Here are some interesting insights from CMHC on new homes in the GTA. According to their research, condominium sales are slowing
New home starts in 2013 will be down from the unusually high level
of last year. Household formation in Toronto is slowing from an average annual rate of 37,000 in the inter- censal period between 2006 and 2011, and at 34,000, total housing starts in 2013 will roughly match household formation.
The decline in starts will occur across all housing types. Most of the decline will occur among apartment starts. Sales of new condominium apartments slowed in the second half of 2012 and continued to ease in 2013.The slowing meant that not only were there fewer apartments to build, but also that it took longer for the projects to move from sales launch to the beginning of construction. A relatively large number of projects have sold a sufficiently high percentage of units to permit construction to begin, setting the potential for a high number of starts in the fourth quarter. However, apartment starts will continue to be restrained by the high number already under construction. Looking to 2014, apartment starts will ease somewhat from the 2013 level. The relatively high number of projects that began selling during 2011 but still have to lay foundations will limit the decline. Completions will exceed starts through most of the year implying the number of units under construction will decline as the year progresses, freeing up resources to allow new projects to start.
Although most units continue to be sold by the time projects reach completion, slower sales have led to a rise in the number of unsold units at all phases of development, according to Urbanation.As a result, asking prices for new units have flattened and prices at project launch have declined from a year ago. Given the price adjustment, sales are expected to pick up in the fourth quarter and into 2014.
