Toronto Real Estate Board President Mark McLean announced Greater Toronto Area REALTORS® reported 4,672 residential transactions, as well as a combined 240,606 square feet of industrial, commercial/retail and office space leased (for properties where pricing was disclosed on a per square foot net basis), through TREB’s MLS® System in January 2016.
This result represented an 8.2 per cent increase in residential transactions compared to January 2015.
“It is clear that the handoff from 2015 to 2016 was a strong one. This is not surprising given that recent polling conducted for TREB by Ipsos suggested 12 per cent of GTA households were seriously considering the purchase of a home in 2016. Buying intentions are strong for this year as households continue to see home ownership as an affordable long-term investment,” said McLean.
The MLS® Home Price Index Composite Benchmark Price for January 2016 was up by 10.7 per cent on a year-over-year basis. The average selling price over the same period was up by 14.1 per cent.
The difference in the annual growth rates for the MLS® HPI and average price was largely due to a greater share of high-end detached homes sold in the regions surrounding the City of Toronto this year compared to last. The MLS® HPI removes the impact of shifts in the share of different property types sold from one year to the next.
“Market conditions in January were tighter compared to a year earlier, with an annual increase in sales up against a decline in listings. This is why growth in the MLS® HPI benchmarks continued to be strong, especially for singles, semis and townhouses, where there has been a persistent lack of inventory,” said Jason Mercer, TREB’s Director of Market Analysis.
Industrial, commercial/retail and office space leased was down from 349,270 square feet of leased space in January 2015, with industrial properties accounting for approximately 60 per cent of space leased.
The month of January is often quite volatile from one year to the next in terms of the types and sizes of properties that are leased. For this reason, average lease rates for reported transactions varied markedly between January 2015 and January 2016, with the average industrial lease rate up substantially year-over-year and the average commercial/retail lease rate down substantially.
“The way in which the GTA commercial real estate market unfolds in 2016 will depend a lot on how the regional economy adapts to the lower value of the Canadian dollar. To date, we have not seen a full resurgence in the goods production sector, particularly as it relates to exports. If export-related production starts to increase, it is possible that commercial sale and leasing activity could increase this year as well,” said Mr. McLean.
There were 40 combined industrial, commercial/retail and office sales reported in January 2016. This result was down compared to 53 sales reported for the same period in 2015.
Similar to the leasing market, sales results for the month of January can be quite volatile, which can periodically lead to larger swings in average sale prices on a per square foot basis. As the number of transactions picks up through the first quarter, in line with the recurring seasonal trend, the volatility in average selling prices is expected diminish.