More first-home buyers in Ontario appear to be delaying their purchases in the wake of the province’s new policies intended to cool the red-hot housing market. At the same time, consumers buying new construction homes are largely opting for lower-priced condo apartments and stacked townhouses.
Two new reports, released separately last Friday by the Toronto Real Estate Board (TREB) and the Building and Land Development Association (BILD), suggest that first-home buyers are holding back and waiting to see what happens in the cooling re-sale housing market.
Among those purchasing new construction, condominiums are the starter homes of choice.
High-rise and mid-rise apartments and stacked townhouses represented 86% of new-construction home sales in May. Sales have gravitated towards high-rise and mid-rise apartments, as the cost of a new townhouse has crossed the $1m mark for the first time, according to BILD.
Condominiums compromised 75% of new-construction home sales this year to date.
Unlike the re-sale market, which has seen an influx of listings over the last two months, the supply of newly built homes remains limited, especially in the single-family home category, BILD said in a press release.
“The price acceleration in the condo portion of the market is especially worrisome since it not only represents the lion’s share of new housing in the GTA, it’s also making it difficult for condos to remain the affordable option,” said Bryan Tuckey, CEO of BILD.
The average price of a new single-family home rose approximately $10,000 to $1.2m in May from April, a 40% gain over last year. Condos averaged $604,683 in May, a $30,000 increase over April, and a 33% rise compared to the same period last year.
Ipsos research for TREB, conducted in May, showed that first-home buyers comprised only 40% of those who plan to purchase a home this year, down from 53% in a November survey.
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