The unprecedented number of cranes that have punctuated Toronto’s skyline in recent years will be a fixture of the city’s landscape for some time to come it appears.
Building permits jumped to a record in July, Statistics Canada said Monday, fueled by a surge in construction intentions among condo builders in Toronto as well as Vancouver. It was the fourth month in a row that the permit intentions unexpectedly increased.
The total value of new permits issued in Toronto jumped 30 per cent from June to July, while in Vancouver, the figure climbed 46 per cent, led by permit applications to build “multi-unit dwellings” or condos, the federal agency said.
“The gain in Toronto was driven by higher construction intentions for multi-family dwellings and, to a lesser extent, institutional buildings,” Statscan said. “The increase in Vancouver came mainly from multi-family dwellings.”
MORE: Toronto’s condo construction towers over Big Apple
Rising building intentions in the two cities lifted the national figure 11.8 per cent. Experts who have been looking for a slowdown in residential development this year amid high home prices and diminishing demand from leveraged consumers anticipated permit values to decline 6.8 per cent in July.
Condo prices to fall?
A surge in building intentions doesn’t automatically mean a surge in new condos coming onto the Toronto or Vancouver markets, experts note, with developers afforded flexibility in how fast they construct new buildings.
MORE: Toronto condo prices to fall amid ‘striking oversupply’
Housing market watchers suggest there’s already a large supply of unsold units coming onto the Toronto market in the coming year that will apply downward pressure on the price of new and existing condos.
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“Excess supply will challenge valuations,” CIBC economist Benjamin Tal said in a note on Monday.
Economists at TD said earlier this year their estimates suggested there was a “striking oversupply” of new condos being built in Toronto, which would translate into price declines.
Sales data for the Toronto Real Estate Board for August showed a year-over-year gain of 4.4 per cent in the average price for a Greater Toronto Area condominium: $352,942.
Here’s a look at how construction activity in Toronto stacked up against New York and other Canadian cities at the start of the year:
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