Altus Group Data Reveals 2016 Record Year for Low-Rise Prices and High-Rise Prices of New Homes in GTA; Sixth Consectutive Record Year for Investment Property Transaction Value
TORONTO (January 27, 2017) – Altus Group Limited (ʺAltus Groupʺ) (TSX: AIF), a leading provider of commercial real estate services, software and data solutions, today released results of the 2017 GTA Flash Report, which provides a comprehensive review of the real estate market in the Greater Toronto Area (“GTA”) based on 2016 Altus Group data. The report highlights a record breaking year in the new home sector and also looks at the performance of commercial leasing, investment and land sectors within the GTA.
Investment property sales, including land sales, as well as sales of office, retail, industrial, hotel and rental apartment properties, reached a total of $17.2 billion in 2016, a 12% increase from 2015 and a record for the sixth consecutive year. Residential land sales contributed a record $5.7 billion to the total, up $640 million over 2015. Sales of rental apartment buildings were down 29% in 2016, the only investment asset class to post a decline in dollar volumes.
In the leasing sector, the GTA-wide office vacancy rate only increased slightly in 2016, even with the completion of 11 new office buildings that added 3.2 million square feet of inventory. The majority of the new office supply was in the Downtown submarket, where the vacancy rate at the end of 2016 was 6.4%, compared to 9.7% overall for the GTA.
Turning to the new home sector, Altus Group’s data shows that total new home sales in the GTA reached 47,161 units in 2016, up 12% from 2015 and the highest level in 14 years.
New high-rise units, primarily comprised of condominium apartments, accounted for 29,186, or 62% of all new homes sold, a record number of transactions for this segment. The report also indicates that the inventory of high-rise units available to purchase declined substantially during the year. In addition, high-rise completions in 2016 were just below 18,000 units, down from over 20,500 completed the previous year.
Conversely, new low-rise sales volume saw a decline for the first time in two years to 17,975 units. This drop was mainly comprised of single-detached and semi-detached units while townhouses saw a modest increase from 2015. The report highlights that a lack of inventory hindered this sector with data indicating that less than 1,900 units were available for purchase at the end of December 2016, which is extremely low compared to historical numbers.
At the end of 2016, the average price of available low-rise homes reached $995,116, up 20% from the same period in 2015. By comparison, the average price for an available high-rise unit in the GTA was $507,128, up 12% year-over-year.
“The decline in low-rise sales in the GTA has not been due to waning demand but rather a lack of product available to purchase,” said Matthew Boukall, Senior Director at Altus Group. “The number of units in newly launched low-rise projects was down for the second year in a row, and the inventory of unsold units reached historical lows during the year. With continued buyer interest and fewer units available to purchase, it is no wonder that prices for new low-rise units continued to set new records in 2016.”
Other key information in the 2017 GTA Flash Report:
- Total GTA investment property sales volumes were split about equally between the City of Toronto and the 905 regions.
- Foreign and institutional investors stepped down their overall investment in the GTA property market in 2016.
- Homebuying intentions among GTA households in late 2016 showed no moderation, despite the tighter mortgage insurance rules introduced in the fall of 2016.
- Brampton was the top municipality for low-rise new home sales in 2016, followed by Vaughan and Milton. The top three submarkets for new high-rise home sales in 2016 were Downtown West, Downtown East and Sheppard Corridor.
- One in 10 renters living in condominium units reported that the owner of their unit was located outside of Canada.
The 2017 GTA Flash Report can be downloaded at http://datasolutions.altusgroup.com/forms/gta-flash-report-2017/.
About Altus Group Limited
Altus Group Limited is a leading provider of independent advisory services, software and data solutions to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Expert Services, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain market insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,300 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include some of the world’s largest real estate industry participants across a variety of sectors. Altus Group pays a quarterly dividend of $0.15 per share and our securities are traded on the TSX under the symbols AIF and AIF.DB.A.