Despite mounting concern about a slide in prices, Toronto’s condominium developers barreled full steam ahead in May hiring more workers to start construction amid a pickup in new projects being launched.
Construction began on about 2,400 condominium units in May, according to fresh figures released by the Canada Mortgage Housing Corp. Monday – a strong pick up compared to previous months when project launches ground to a halt amid fears that oversupply could lead to a sharp downturn in prices.
The May surge may exacerbate those concerns as the number of unsold units being built adds to high inventories.
“These are projects that opened up when the market was very strong,” Shaun Hildebrand, executive vice-president at Urbanation, a market researcher, said.
Indeed, the majority of new units are pre-sold, having been bought last year when buyers and investors were trying to get into the market before stiffer lending rules went into effect.
Last month’s uptick, which caught some market watchers off guard, is a look in the rear view mirror at what demand was like in early 2012 when many of the condos were being sold, Hildebrand said.
Sales figures are the forward-looking indicator to pay attention to, David Madani, economist at Capital Economics says.
There, the Toronto Real Estate Board shows faltering sales amid evaporating demand. In the outlying 905 region, existing condo sales are off 16 per cent year on year. In the city’s core areas, they’re off 6.4 per cent.