Toronto and Vancouver are experiencing a condo boom, with data showing a record-breaking 16.9% increase in urban construction starts in November. In raw numbers, this represents 175,016 units.
Studios and one-bedroom apartments now represent around 60 percent of all units under construction in Toronto. By contrast, before 1990, two- and three-bedroom apartments made up nearly 70% of all units, reports market research firm Urbanation.
This situation is not benefiting urban planners and families, who are trying to find affordable housing, but instead investors trying to shell out a minimal amount of money and take advantage of price appreciation later on, reports Huffington Post.
Furthermore, according to the Toronto Real Estate Board’s Home Price Index, in November condo prices in Toronto were 21.6% higher compared to last year. By contrast, detached home prices saw only a 4% growth. Compared to the Toronto region, in Vancouver, both unit types experienced a higher increase in value. On a year-over-year basis, prices for Vancouver condos for sale grew by 23.9% and those for detached homes by 6.1%. Michael Ferreira, principal at consultancy Urban Analytics, believes that these price increases provide the perfect ground for speculative investments.
And even though governmental measures were taken to increase the number of “family-friendly” condos, new units ended up looking more like student housing, which in turn bring in even more investors.
While fears over the current market situation are being expressed in both provinces, Robert Hogue, economist at Royal Bank of Canada, believes that comparing Vancouver and Toronto to U.S. markets, such as Miami, is not realistic. This is because in Canada developers start building or receive financing only after most of their units are sold. According to him, “There is effectively no building ‘on spec’ in Canada, and this is a sharp contrast with the situation we saw in the United States.”
Original article published by huffingtonpost.ca