The Toronto region’s hot condo market is seeing a moderation in prices from the soaring highs of the last couple of years, with pre-construction sales volumes hitting a six-year low in the first quarter of 2019, even though cranes from a record number of buildings continue to dot the skyline.

That’s because 90 per cent of the record 71,378 condos currently under construction were sold prior to this year.

There were only eight new projects, containing a total of 1,829 units, launched in the first quarter of 2019 — a 10-year low — reports Urbanation, a market research firm that tracks the industry. That compares to 4,053 units in the same quarter last year and 6,293 in the first quarter of 2017.

The number of units released in the second quarter of this year could rise to about 10,000. How well they sell in the peak spring season will be a good indication of the 2019 market overall, according to Urbanation president Shaun Hildebrand.

First-quarter indexed average selling prices rose 1.7 per cent compared to the fourth quarter of last year — to $779 per sq. ft., from $766 — amounting to a 10 per cent increase year over year. In downtown Toronto, where the supply of condos is especially tight, the average asking price rose 13 per cent to a record $1,279 per sq. ft. on average. The average price of unsold condos region-wide rose 9 per cent compared to the first quarter of 2018 to $998 per sq. ft.

Hildebrand said developers are being more cautious in light of flatter prices.

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“There’s been a number of projects cancelled so developers are very cognizant of that, and land prices and development costs keep going higher so they have to be very sure the market is going to support the prices they need to move forward,” he said, adding that investor fatigue could also be a factor.

Historically, investors have accounted for about half of new construction condo buyers. In the last three years, that has risen to about 60 or 65 per cent, he said.

“If the price is too high, they won’t buy. There have been some examples of projects coming out too aggressively that haven’t performed as well as was expected. In other cases, well-located and competitively priced projects have sold extremely quickly,” he said. “Developers that have prime sites that are looking to get premium values are waiting to see if perhaps the market could go a bit higher.”

Pre-construction condo prices rose by more than 50 per cent between 2016 and 2018.

The high cost of smaller condos and the softer price of other kinds of homes, such as townhouses and semi-detached homes, are also having an effect, said Hildebrand.

“Those price differentials are a lot smaller today than what they were a few years ago,” he said, adding that the mortgage stress test is also likely shutting out some first-time buyers for whom condos are frequently the entry-level home.

For condo buyers, Hildebrand suggested a longer-term strategy is wise.

“I’d be cautious about investing at a price point that’s exceptionally higher than comparable re-sale buildings, but if you’re looking to hold on to it for a while I don’t think there’s a lot of concern,” he said.

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While supply is tight now, that will change when the buildings under construction are completed.

“If you’re looking to buy a condo now and sell it in two years I’d say that’s not a good strategy. If you’re in the market to look for a condo you may want to wait a little while to see if there is an opportunity with the new units that are coming on line or if you’re purchasing today just have a longer time horizon and recognize price growth is already starting to slow down,” he said.

“It’s growing at a 3 per cent annual rate as opposed to a 10 or 20 per cent rate that we’re used to seeing. We’re bringing the market back to its longer-term trend line.”