Why are central Toronto condo prices rising so fast? It’s a complicated issue but here is a summary of reasons:
- Rising immigration year to year. Currently the federal government is raising its targets by 3-6% per year; 310,000 (2018), 330,000 (2019), 340,000 (2020). In the previous decade the average was 260,000. 35% of these new immigrants end up in the GTA
- Economic growth in Canada is now approaching 3% (GDP)
- The unemployment rate is 5.7%, the lowest it has been in 40 years.
- Inflation is less than 2%
- Interest rates are still very low historically
- Provincial and Municipal governments have meddled in the condo economy to a huge extent, contributing to a shut off of new inventory.
- Historically low inventory of condos available to buy or rent
- New rent controls that discourage the development of all rental housing including condos.
- Toronto is now a world city with many international buyers and visitors eager to experience the exciting city it has become.
For all of these reasons plus a few more, it seems unlikely that prices for condos will see much relief. Bubble talk is just talk. I have heard it every year since 1998 when Toronto’s great rebuild kicked into overdrive.