Canada's biggest bank has sounded the alarm about overbuilding in Toronto's condo boom, saying the level of new units coming online coupled with existing ones that are yet to sell have the market in 'high risk' territory. In the first quarter of 2016, there were almost six new condo units under construction across the country for every 1,000 people, just off an all-time high hit in 2014. "This level is well into the high risk zone," the bank says, which it defines as anything about 4.5 condos under construction per 1,000 people.
Condo construction now makes up one third of all types of home construction. So far, the booming market in Canada's largest city has been able to absorb all those new units, as there's still strong demand for housing in the downtown core. But high levels of construction entails the risk that many units may reach the completed stage at once, thereby flooding the condo resale and/or rental markets, the bank said.
While Toronto was deemed the biggest threat, the bank said the sheer volume of condos coming down the pipeline could pose problems in almost every market. The prospects for high levels of condo completions in the period ahead in markets such as Toronto, Montreal and Calgary maintain above-average absorption risks.
Source: Evans, Pete. "Toronto Condo Market Is in 'high Risk Zone' of Overbuilding, RBC Says." CBC news. CBC/Radio Canada, 2016. Web. 27 May 2016.
Condo construction now makes up one third of all types of home construction. So far, the booming market in Canada's largest city has been able to absorb all those new units, as there's still strong demand for housing in the downtown core. But high levels of construction entails the risk that many units may reach the completed stage at once, thereby flooding the condo resale and/or rental markets, the bank said.
While Toronto was deemed the biggest threat, the bank said the sheer volume of condos coming down the pipeline could pose problems in almost every market. The prospects for high levels of condo completions in the period ahead in markets such as Toronto, Montreal and Calgary maintain above-average absorption risks.
Source: Evans, Pete. "Toronto Condo Market Is in 'high Risk Zone' of Overbuilding, RBC Says." CBC news. CBC/Radio Canada, 2016. Web. 27 May 2016.