Toronto has always been a place for the rich to enjoy their spoils by buying up luxury condo’s that even a King would covet. But in the last two quarters of the previous year, the market for luxury condos has flatlined. The number of completely new condominiums sold in the last quarter was a full 18% a lesser amount than the previous year. In fact, even the number of condos built seemed to be considerably lower (at least 1, 000 less) in comparison with last year. But what is fueling this loss of growth, and does it mean for the real estate market in general?
While the downturn inside Toronto condo market has taken hold the number of condos staying built hit an all-time high, 35, 000. The oversupply connected with luxury condos has created a serious situation for both condo builders and the city of Toronto. It is possible that the rising range of condo vacancies will spur current condo owners to easily sell off their properties thus flooding the market with all the more unwanted luxury homes.
Banks are also getting in the mix. Definitely, banks are the sole financiers of any real estate market and unfortunately, the gap between them and condo developers features widened to about $3 billion currently. That is a critical investment issue. If banks are nervous about them at this time luxury market their credit line will decrease significantly. Components on the world stage don’t help the market either. The United States and Europe have experienced drastic economic instability over the last decades, and world banks have taken note of that and are getting ready themselves in other markets. Canada is no stranger to help recessions either. During 2011-2012 the country experienced a market bubble that it won’t soon forget, and banks absolutely haven’t forgotten either.
Of course, not all is bad news. Authorities are not rushing out with doomsday fliers just yet. People and banks alike remind us that the luxury condominium market is just one sector of real estate in Toronto and ought to be looked at separately. According to Sotheby’s International, condos listed as well as sold for more than $1 million have seen a 4% attain in the first six months of 2013. This shows that an upswing in the market could be upon Toronto. In reality, even though people are flooding the market it shows that the potential for luxury real estate sales is still positive. But investors tend to be skittish and if the marketplace doesn’t make a sharp upswing soon things could set out to look awfully hairy for the city. Know more about affinity at serangoon singapore