Affordability is top of mind for most homebuyers in the Greater Toronto Area, but what do new home industry professionals worry about with 2020 right around the corner?
PwC Canada and Urban Land Institute released the 2020 Emerging Trends in Real Estate report, assembled with survey results from developers, investors, lenders, and other industry leaders.
Overall, real estate professionals are “cautiously optimistic” about 2020, but there are plenty of challenges that lie ahead, including changing customer expectations, preferences and behaviour. There will also be challenges associated with keeping up with trends like coworking and the sharing economy, policy changes, economic uncertainty, and of course business factors like labour shortages, cybersecurity vulnerabilities, and skills gaps.
Looking at residential development specifically, the top issues include rising construction, material and land costs, and long approval processes. Survey responses said that the government can help with supply issues by creating transit oriented development policies that allow for higher density near major transit hubs.
"Governments must recognize that increased supply can help address the affordability issue and be willing to embrace innovative ways of unlocking a supply-constrained market," says Frank Magliocco, National Real Estate Leader, PwC Canada.
In Toronto, condo developers are proceeding with caution as project cancellations dominate headlines, approval processes continue to be delayed, and price growth has slowed down. Rising construction and land costs are also causing some unease in Toronto’s new condo market.
On the bright side, survey respondents reported an increase in demand for larger condo suites, and many developers are recognizing the demand for a wider variety of services, so instead of only retail, condo communities are including more amenities, like elevated parks, community centres, and daycares.
“There is a better way to achieve a responsible use of land that addresses affordability concerns, and it’s not from current attempts, like the stress test, to temper demand,” says Richard Joy, Executive Director, Urban Land Institute (ULI) Toronto.