A correction in the red-hot Toronto area condominium market 'cannot be far away,' says a leading housing economist.
Buying for investment purposes in the Toronto market has been 'far in excess of market needs' and buyers face 'very high risks,' said economist Will Dunning in his most strongly worded analysis yet of the Toronto market, released yesterday.
Nearly a decade into a robust housing cycle, high-rise sales remain extremely strong, with second quarter sales at an annual rate of 20,800, a record high, said Dunning."
While other housing economists have expressed concern over what they see as a potentially frothy condo market, Dunning, a former Canada Mortgage and Housing Corp. economist, has been among the most conservative.
Price appreciation for condos continues at a good clip — 5.9 per cent year over year — and the average condo rent has increased 2.1 per cent.
But this won't last long, according to the gloomy forecast.
"An onslaught of condo completions is just beginning and I expect that rents will start to fall late in the year with the possibility of price weakness to follow," said Dunning.