The GTA new homes price index for high-rise units hit $382,604 in June 2008. Generally the last four years we've had 8%-10% price increases yr/yr, but this past year we've been approaching 20% (7% in the first 6 months of 2008 alone) - overall it's a 50% increase in the last 4 1/2 years. The increases in the downtown core have usually been higher then the GTA average.
There are many reasons for this - general supply & demand (although the high-rise remaining inventory hit a record high of about 17,000 units recently). The main culprit for the increases in high-rise prices has been land availability and the rising cost of land - especially in the city core - there just aren't as many prime lots available for development and costs are rising. Even out in the 905 low-rise lot prices have risen significantly the last few years due in part to industry consolidation and government policies restricting land use (i.e. the greenbelt, places to grow, changes to the OMB that limit appeals with respect to urban boundary expansions and other land takings from other public agencies).
Other costs which are getting passed onto consumers are increasing costs of obtaining capital (credit crisis – situation should hopefully improve in coming months), rising construction and material costs, labour costs (that may start to come down as the market slows) and increasing approval delays (time is money & uncertainty increases risks & therefore costs for development proponents), as well as increasing taxes/fees (i.e. land transfer tax, rapidly increasing development charges, increasing section 37 requirements, increasing site plan approval requirements… etc) and other regulatory issues (i.e. mandatory residential sprinklers in high-rises starting in Sept 2009, Toronto green building standards, changes to the OBC… etc).
