Investors represent a significant factor that is very closely linked to the GTA condo market. They make up almost half of GTA’s new construction condo sales but for some investors now, cash flow isn’t positive enough to cover the expenses from their investments. 44% of investors reported being in a negative cash flow position. Analysts are predicting that some will start selling if the shortfall starts to become greater than $1000 a month. On the other hand, many investors are willing to absorb some shortfalls in the short term in order to keep their investment long term. Investors believe condos will be a great asset to have 10 or 15 years down the road so they take on a long-term view of the issue, trying to remain neutral through short-term issues.
Because the average price of a new condo increased by 39.5% compared to the year before, investors who purchased in 2017 have already earned some returns. Experts predict that limited supply and growing demand will continue to raise condo prices in the coming months. The second question led from this is if investors will continue to invest as prices show no signs of stopping. According to a report, investors who bought pre-cons in 2017 with scheduled completion of 2021 would need the average rent to increase by 17% in the next four years to cover all expenses.
Regardless of the rising prices, the demand from investors will likely be steady as there are other factors to consider. Lots of investors are looking at the condo not only as an asset but as a way into a stable lifestyle in a country that is economically and politically safe. The vast majority of investors will acknowledge the pricing challenges that come with owning a condo and renting, and they are willing to accept those in order to gain long term benefits.
Source: Buzz Buzz Home
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