July 18 (Bloomberg) -- Toronto condominium sales jumped in the second quarter, as investors in Canada’s biggest city soaked up a wave of supply to feed demand for rentals.
Unit sales rose 10 percent to 6,553 in the three months ended in June from the same period a year ago, according to figures from the Toronto Real Estate Board. That follows a 9 percent annual gain in the first quarter.
The average selling price rose 5.5 percent to a record C$367,010 ($342,000), after a 5.6 percent advance in the first quarter.
“Many of these are bought by investors to rent out and there’s just not enough rental supply,” Paul Etherington, president of the board, said by phone today.“The prices will continue to go up in the future but I don’t see them going up as dramatically.”
About a quarter of new condominiums are purchased by investors who rent the units to residents in a city where the supply of purpose-built rentals is limited, he said.
There were 58,659 condo units under construction at the end of last year in the city, with about 19,000 scheduled for completion this year, according to Toronto-based condo researcher Urbanation Inc. While economists and developers had expressed concern that the supply would pressure prices, demand keeps coming from buyers forced out of the house market as prices continue to rise.
Families, young professionals, and baby boomers are all seeking apartments to buy and rent as a more affordable option, Etherington said.
There will be enough demand to push condo price expansion above the rate of inflation for the rest of the year, Jason Mercer,the board’s senior manager of market analysis, said in the statement.
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