TRREB reported a 42.9% decline in sales and prices of condominium apartments in Q1 2023, with an average selling price of $700,566, down 11.4% from the same period in 2022. TRREB expects a rebound due to population growth, tight rental market conditions, and first-time buyers.
I expect the condominium apartment segment to be one of the recovery leaders in terms of sales and price growth, with an expected increase in first-time buying activity. Higher borrowing costs have caused a temporary lull in condo buying activity.
Recent Ipsos polling suggests that first-time buying activity will pick up this year due to double-digit rent increases over the past two years. Despite increased interest rates, mortgage payments for a condo are now comparable to the cost of renting for many potential buyers.
Homeownership provides equity growth and asset appreciation over the long term, while population growth and high borrowing costs put pressure on the GTA condominium apartment rental market. There were 10,525 condominium apartment rentals reported through MLS in Q1 2023, a 4.0% increase compared to Q1 2022.
The average one-bedroom condominium apartment rent increased 15.1% year-over-year, while the average two-bedroom rent increased 9.2%. Recent polling showed a significant number of renters are considering buying property due to the rising monthly rent. Baron believes the GTA condominium rental market is a crucial source of rental supply, but tight market conditions are causing an unsustainable pace of rent growth.
The development of purpose-built rental properties should be an integral part of housing policy at all levels of government.
