GTA Activity Mixed In 2017, With Home And Office Sales Down As Prices Rose
Housing sales dropped 18.3% in the greater Toronto area in 2017 following a record-breaking 2016, according to a year-end report by the Toronto Real Estate Board.
Meanwhile, a second TREB report found GTA office space led in leasing and sales in Q4.
TREB — a not-for-profit organization that serves more than 49,000 real estate brokers and sales people in the GTA — recorded 92,394 house sales last year in the GTA, with an average price of $822,681.
The report notes record sales were recorded in Q1. But after the introduction of the Ontario government’s Fair Housing Plan, aimed at controlling a volatile market, sales declined in Q2 and Q3.
TREB concludes an increase in sales in Q4 may have partially been the result of buyers entering the market ahead of the new lending rate guidelines brought in by banking regulator OSFI on Jan. 1.
“Much of the sales volatility in 2017 was brought about by government policy decisions," TREB President Tim Syrianos said.
“The Ontario Fair Housing Plan, which included a foreign-buyer tax, had a marked psychological impact on the marketplace. Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect.”
Detached-home prices in the GTA rose 12.8% in 2017 with an average price of $1.1M. Condo prices went up 23.1%, rising to an average of $512K. Overall, the average housing price was $822,681.
“The detached market segment — the most expensive on average — experienced the slowest pace of growth as many buyers looked to less expensive options,” TREB Director of Market Analysis Jason Mercer said.
“Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions.”
In a second TREB report, commercial leasing in Q4 rose slightly year-to-year while sales sank.
A total of 5.9M SF of combined commercial, retail and office space was reported leased through TREB's system in Q4, up slightly from 5.8M SF during the last three months of 2016.
The great majority of that leased square footage was industrial, which represented 75% of the total, or approximately 4.5M SF.
Leased office space showed the biggest gains year-over-year, up 42.7% from 693K SF to 989K SF.
“The fact that Q4 2017 leasing activity was up compared to last year is a positive sign and is in line with the consensus view that economic growth in Canada will remain relatively strong in the coming year with business investment intentions remaining positive,” Syrianos said.
“Businesses take on new space when they are confident that their business will expand in the future.”
The average lease rate on a per square foot basis was up in all major commercial markets in Q4. Lease rates for industrial (up 9.1%) and commercial/retail (up 1.6%) trailed well behind office lease rates, which rose 21.2% year-over-year from $12.86 to $15.58.
There were 211 industrial, commercial/retail and office sales in the GTA in Q4 — down 42.3% from 366 sales reported in Q4 2016.
Average industrial space price per square foot was up 68.2%, while commercial space was down 22.6%. Office space was once again in the lead, rising 115.2% year-over-year, from $180.35/SF to $388.04.