New house prices up 0.1 per cent in Toronto
May 12, 2010 Tony Wong
Builder Hans Jain is juggling four different residential projects in the city of Toronto – the busiest he’s ever been.
A principal at family run boutique developer Atria Development Corp., Jain finds himself running between developing town homes in east Toronto and condominiums in Scarborough.
“I’m amazed at how resilient Toronto has been compared to what you see happening in the greater economy,” says the 39 year old developer.
Still, unlike the existing home market where prices are up 13 per cent from last year, new home builders have largely held the line on pricing according to figures released by Statistics Canada Wednesday.
So far new housing prices in the Toronto market are up by 1.4 per cent in March compared to the same time last year according to the federal agency. Month over month, prices are up slightly by 0.1 per cent in March.
The increase comes on the heels of a 0.7 per cent drop in prices in February.
“Buyers are still very careful, and they are looking at value,” said Jain.
Atria’s last project, eight low rise homes in the Beach neighborhood of Toronto launched last year, has mostly sold out. Because it is a sought after neighborhood, prices increased by about 10 per cent. The last unit available, a detached 3,600 foot home is on the market for $1.15 million.
Murtaza Haider, director of the institute for housing and mobility studies at Ryerson University says that unlike the existing home market, new home prices have not increased by as much.
“The new home market and the existing home market seem to be taking different trajectories,” said Haider. One reason, says Haider is that there is a large supply of unsold condominiums on the market helping to keep average prices down.
“You have this build up of inventory of unsold condos which are having a deflationary effect on the price of new housing stock,” said Haider. “The resale market has been an entirely different story.”
With prices increasing faster than demographic trends, some analysts say the existing home market is overpriced and a reckoning is due next year, when prices may fall.New home prices however, have been constrained because of the large supply. And there is more looming, with an estimated 35,000 additional condos in the pipeline being built.
Jain says he is still optimistic over the future, but the key is to pick the right neighborhoods.
“Toronto is still a place where many families want to be, there are pockets that will hold long term value,” said Jain.
Nationally, new home prices rose 0.3 per cent in March over February.
Prices rose the most in London, Ontario at 1.7 per cent, followed by Montreal and Kitchener, both up by 1 per cent.
“Builders increased their prices as a result of higher material costs, strong market conditions and higher land development costs,” said Statistics Canada.
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