The Greater Toronto Area (GTA) new home market will experience a slower pace in activity during 2009.
Total new home sales are expected to drop to 15,500 units this year from 28,000 sales reached in 2008. Pre-construction high-rise sales will reach 7,000 units while low rise sales are expected to hit 8,500 unitsin 2009, resulting in an increased share of new home sales in the lowrise segment for the first time in six years.
Softening resale market conditions have resulted in an increased supply of lower priced resale homes in many GTA neighbourhoods. Discerning buyers will be able to purchase homes at significantly lower prices in the resale market than in the new home market. Reduced pre-construction sales centre traffic will be the result.
This substitution effect will slow price growth in the new home market in 2009 — the average price for a new single detached home will slip by about two per cent to $512,000.
Sales of high rise units will account for about 45 per cent of total sales this year, down from 55 per cent in 2008. While fewer projects are likely to open this year, reducing the total number of condominium units available for sale, project launches and sales are expected to pick up during the latter part of 2009.
Improved financing conditions and lower construction costs passed on by builders will bring more competitively- priced units to the market. Steady immigration to Toronto and favourable demographic shifts will continue to play a major role in increasing demand for new condominium apartments. Lower prices for condominium apartments are especially attractive to newcomers to Canada looking for an entry point into homeownership.
An aging baby boomer population gearing up for retirement will also look towards this housing sector as they look to downsize and minimize housing maintenance. A compositional shift in Toronto’s employment landscape will further add to demand for more affordable housing. Job losses in the goods-producing sector will mean GTA housing demand will rely more heavily on employment in the lowerpaying