TORONTO, Aug. 28, 2019 /CNW/ - According to Royal LePage, the median price per square foot of condominiums sold in the Greater Toronto Area (GTA) has risen 9.1 per cent (to $743/sq. ft.) compared to last year.1 Meanwhile, the correction in real estate prices continued in Greater Vancouver, as the median price per square foot of a condominium fell 8.3 per cent (to $764/sq. ft.).
"In Canada's largest cities, many younger buyers searching for affordability and baby boomers looking for maintenance-free living purchase condominiums. Not surprisingly, that strong demand has pushed up price per square foot, with the exception of Vancouver and Calgary," said Phil Soper, president and CEO, Royal LePage. "Buyers are adapting by purchasing smaller units, especially among those looking for entry-level properties."
Examining all residential housing types (aggregate) in the greater regions, the price per square foot in Greater Ottawa had the largest year-over-year increase in the country (9.6%) followed by the Greater Montreal Area (5.9%). Price per square foot in the Greater Toronto Area rose 2.0 per cent, driven by a 6.1 per cent increase in the city of Toronto. The housing markets in Greater Vancouver and Greater Calgary posted the most significant declines with the aggregate price per square foot, decreasing 11.3 per cent and 6.2 per cent, respectively.
The price per square foot in the city of Vancouver remains the highest in the country despite a recent price correction in the region's real estate market. Home buyers can expect to pay $1,044 per square foot for a condo and $1,279 per square foot for a single-family detached home.
Across all markets studied, with the exception of the city of Vancouver, the median price per square foot for condos is higher than single-family detached homes.
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1Actual values: Data collected includes resale and new build transactions between January 1 to July 31, 2019 compared to the same period in 2018. Data provided by RPS Residential Property Solutions. |
"While condo units are smaller, they are the present and future of our communities. With more development opportunities, they can meet both the growing need for housing and lifestyle expectations of homebuyers," continued Soper.
Although the median price per square foot for a condominium is significantly higher in the city of Vancouver compared to the city of Toronto, the median price per square foot in the greater regions only favoured buyers in the Greater Toronto Area by $21 per square foot. However, condo buyers in Greater Vancouver purchased 62 more square feet than those in the GTA.
At $313 per square foot, Greater Calgary offered the lowest price point for condominiums of all markets surveyed.
"Calgary condominiums offer the best value in Canada's major markets," said Soper. "It is no wonder that the city vaulted to number four in The Economist's ranking of the World's Most Livable Cities."2
REGIONAL SUMMARIES
Greater Toronto Area
In the first seven months of the year, the median price per square foot of a condominium in the GTA experienced a substantial increase in price per square foot, rising 9.1 per cent year-over-year to $743, while the price per square foot of a single-family detached home increased a more modest 1.0 per cent year-over-year to $486.
"Low inventory levels are putting upward pressure on price per square foot in the Greater Toronto Area, especially for entry-level properties like condos. Although detached homes hold more value per square foot, condos are more affordable for first-time home buyers in the region given their smaller living space and higher supply," said Tom Storey, sales representative, Royal LePage Signature Realty.
During the same period, the aggregate price per square foot of a home in the city of Toronto witnessed an increase of 6.1 per cent year-over-year to $782. When broken out by housing type, the median price per square foot in the single-family detached market remained relatively flat, increasing 1.5 per cent year-over-year to $747, while the median price per square foot for a condominium in the region saw a significant increase of 8.5 per cent year-over-year to $839.
"Millennials know what they want and, in some cases, are willing to pay more for less space in order to be in their desired neighbourhood. This is consistent with the trend of location being an increasingly important aspect of home ownership in today's market," said Storey.
In the city of Toronto, the median size of a condominium was 752 square feet, which was half the living area of the median single-family detached home (1,512/ sq. ft.). Interestingly, expanding outside of the city's core to the Greater Toronto Area only provides a 4 per cent increase in the median condominium living area (783/ sq. ft.), compared to a 32 per cent gain in square footage for the median single-family detached home (2,000/ sq. ft.).
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2 The Economist, The 2018 index of global liveability |
Greater Montreal Area
The median price per square foot for a condominium in the city of Montreal for the first seven months of 2019 climbed 7.9 per cent year-over-year to $433, while the price per square foot for a single-family detached home rose 6.9 per cent year-over-year to $313. Overall, the aggregate price per square foot of a home in the city of Montreal and Greater Montreal Area increased by 8.3 per cent and 5.9 per cent to $357 and $286, respectively.
The increase in the price per square foot of a condominium in the Greater Montreal Area was double that of a single-family detached home, rising 10.3 per cent and 5.2 per cent, respectively.
"Baby boomers looking for smaller units, millennials increasing their purchasing power, and more foreign buyers contributed to a hike in condo prices and demand in the past three years," explained Maxime Tardif, real estate broker at Royal LePage Altitude. "Available land is limited on the island; builders and developers are making every square foot count. As a result, more high-end, spacious units are being constructed in the suburbs, particularly near transit stations."
Although property prices remain lower outside the city core, the price per square foot appreciation rate of condominiums in the Greater Montreal Area grew faster than in Montreal proper, rising 10.3 per cent, compared to 7.9 per cent, respectively.
"The outskirts of the city are becoming attractive to many home buyers who are willing to trade shorter commute times for more square footage and better affordability," continued Tardif. "With the transit system expansion that the REM will bring by 2021, commuting to the city core will be easier and make living outside the city centre more desirable."
According to Tardif, areas such as Mercier, Maisonneuve (east of Viau Street), Ahuntsic, Lachine, and Lasalle offer the most attractive price-to-size ratio in the region, while neighbourhoods south of the island (including Verdun) have seen the value per square foot rise more significantly in recent years.
Of all markets studied, Montreal and the Greater Montreal Area offer the largest median condominium living space. The median size of condominiums sold in Montreal and the Greater Montreal Area in the first seven months of the year was 944 square feet and 989 square feet, respectively. For Montreal, this represents 25.5 per cent and 21.0 per cent more condo square footage than Toronto and Vancouver, respectively.
Greater Vancouver
In the first seven months of the year, the median price per square foot of a condominium in both the city of Vancouver and Greater Vancouver became more affordable, decreasing 6.3 per cent and 8.3 per cent year-over-year to $1,044 and $764 per square foot, respectively. Despite the decline, of all markets studied, the city of Vancouver still posted the highest median condominium price per square foot. Yet, with the recent divergence in their appreciation rates, the gap between the median condominium price per square foot in Greater Vancouver and the Greater Toronto Area ($764 and $743 per square foot, respectively) is closing.
"With a deceleration in Vancouver's condo market, buyers for the first time in several years can benefit from the changing landscape. Higher inventory levels have resulted in the market nearing the point of oversupply and price per square foot has been decreasing considerably in this category," said Adil Dinani, real estate advisor, Royal LePage West Real Estate Services. "We are also seeing a trend of buyers moving beyond the city core and closer to the transit corridor where properties are more affordable."
While the median price per square foot of a single-family detached home in the city of Vancouver is significantly more than that of a city condo at $1,279 and $1,044 per square foot, respectively, in Greater Vancouver the median price per square foot of a condo ($764/ sq. ft.) is higher than the single-family detached home ($648/ sq. ft.).
"We predict condo buyers in the coming year will continue moving east where properties are more affordable, especially while interest rates remain low," Dinani continued. "In addition to better affordability, many neighbourhoods in Burnaby, the Tri-Cities and the Valley are developing attractive necessities that were previously only available in Vancouver."
The median living area of a condominium in Greater Vancouver and the city of Vancouver in the first seven months of 2019 was 845 and 780 square feet, respectively. Meanwhile, the median living area of a single-family detached home in Greater Vancouver and the city of Vancouver was 1,958 and 1,728 square feet, respectively.
Greater Calgary
Affordability in the city of Calgary and Greater Calgary's condominium markets continued to grow in the first seven months of the year as the median price per square foot decreased to $313 in both, representing a 6.8 per cent and 6.7 per cent drop, respectively. In contrast to other markets studied, the city of Calgary and Greater Calgary have a condominium price per square foot that is almost on par with that of single-family detached homes, which are $310 and $302, respectively.
For the first seven months of 2019, the median living area of condominiums in the city of Calgary and Greater Calgary was 842 and 850 square feet, respectively, while the median square footage of a single-family detached home in the same areas was 1,734 and 1,769 square feet, respectively.
"The price per square foot gap of a condo and a detached home in Calgary is minimal but the condo's smaller square footage means a more affordable price point. However, it's not just about affordability. Condo buyers are attracted to a low maintenance lifestyle and amenities," said Dawn Maser, realtor, Royal LePage Benchmark. "For the fourth consecutive month, condo inventory in the region declined compared to last year. It's a good sign that the condo market may be stabilizing."
Maser added that Seton is a neighbourhood with attractive offerings for first-time home buyers.
Greater Ottawa
The median price per square foot of a condominium in Greater Ottawa experienced the most significant increase across all property types in all regions analyzed during the first seven months of the year, climbing by 17.9 per cent year-over-year to $395. Comparatively, the median price per square foot of a single-family detached home in Greater Ottawa over the same period rose 8.5 per cent to $265.
"Inventory levels in the Ottawa market continue to be very low for both condos and detached homes, contributing to price increases. Demand remains high and listings are selling quickly," said Kent Browne, broker and owner, Royal LePage TEAM Realty. "We are seeing significant interest in Ottawa's south and west ends from residents working in the nearby military and technology hubs."
Similar to the larger region, the city of Ottawa experienced healthy appreciation in both the condominium and single-family detached markets. During the first seven months of the year, the median price per square foot of a condominium in the region increased 4.2 per cent year-over-year to $444, while the median price per square foot of a single-family detached home increased 6.8 per cent year-over-year to $282.
The median living area of a condominium and single-family detached home in the city of Ottawa in the first seven months of 2019 was 889 and 1,942 square feet, respectively. In Greater Ottawa condominiums and single-family detached homes had a median size of 909 and 1,761 square feet, respectively.