As discussed in Part One of our 2016 GTA Market Report series , decreases in the availability of developable land due to legislated land boundaries and legislative land use policies have constrained supply of developable land and kept new home inventory at very low levels. The limited supply of new housing has highlighted the strong housing demand currently seen in the GTA and GGH markets, as evidenced in the Trimart 2016 Annual Forecast Report. One of the leading market research firms focusing on low-rise homes sales within the GTA and the GGH, Trimart’s report states:
“New Home Sales (Low and High Rise) achieved 46,830 sales in 2015, up 10.4 % from the previous year. However, low-rise sales are up 18.8% compared to 2014, achieving 24,830 sales in the TMA (Trimart’s Total Market Area). Despite low inventory levels, price pressure and negative media coverage, the low-rise new home market in particular, was able to achieve average monthly sales of 2,069 units.” In fact, strong demand in the first quarter of 2016 was outpacing Trimart’s own original projections as “April marks the start of the 2nd Quarter with 37.5% of the annual Trimart forecast already achieved.”
Residential housing demand is expected to remain strong as the province of Ontario’s population continues to grow at an impressive pace. In the Government of Ontario’s recently published report, “Planning for Health, Prosperity and Growth in the Greater Golden Horseshoe: 2015-2041”, the province forecasts that the number of people living in the GGH will grow from approximately 9 million to closer to 13.5 million by 2041, with the number of jobs forecasted to rise from 4.5 million to 6.3 million. This growth will increase our population by nearly 50 percent and the number of jobs by 40 percent.
In addition to these figures, according to the Real Strategies “Fear vs. Risk in the GTA Property Markets: A Change in Plans” report, the GTA has averaged approximately 100,000 net new residents each year for the past 20 years and that growth is expected to continue over the next two decades. This steady increase in population translates to an annual requirement of 40,000-45,000 net new residential dwellings.
Source: Altus Group Economic Consulting based on data from Statistics Canada, Ontario Ministry of Finance
As the region develops, population growth will continue to be a fundamental driver of demand in the GTA and GGH housing market for the foreseeable future. To learn more about the 2016 GTA Market Report, please contact your Greybrook Investment Representative, or check back next week for the next post in this series.