-   Canada's major condo markets expected to deliver strong performance
        in 2007/2008
    -   Hot western market expected to cool somewhat, eastern markets likely
        to see solid price gains
    -   Condo affordability still far ahead of detached homes

    TORONTO, May 17 /CNW/ - Canada's major condo markets should continue to
deliver strong economic performance in 2007/08, due to strong economic trends
including a robust labour market, supportive interest rates and an aging
population, according to a special report by TD Economics. Despite the number
of new condominiums coming on the market, robust demand appears to be
absorbing the additional units, creating a sellers' market in most urban
centres.
    Entitled "Condos To Remain An Attractive Option for Many Home Buyers,"
the report follows an Ipsos-Reid survey of potential condo buyers in five
cities commissioned by TD Canada Trust in March of this year. The survey found
39% of Canadians would consider buying a new or resale condo, a 4% rise from a
similar survey in June 2006.
    "The bottom line is that the TD condo survey corresponds well with
economic trends," says Craig Alexander, Deputy Chief Economist, TD Economics,
and the report author. "Several short- and long-term indicators support the
large and growing popularity of the condo lifestyle. The hottest markets,
notably Calgary and Vancouver, will see some cooling off from dramatic and
unsustainable highs last year, but overall conditions will remain healthy and
activity will be high."

    A Sellers' Market

    From 2001 to 2005, condo starts have posted an annual average increase of
more than 16%. Over the past decade, condos have climbed from nearly one-fifth
to nearly one-third of all new home construction. Despite this marked growth
in supply, the sales-to-new listings ratio on apartments, which are dominated
by condos, has been well above the traditional threshold for a sellers' market
since 2001.
    Strong price gains, especially in western markets, have outpaced growth
in personal income and led to a deterioration in condo affordability
nationwide. While this decline will eventually dampen demand and lead to
slower price growth in future, it is not a major problem for the condo market
since condos are, and will remain, considerably more affordable than houses.
    Over the next 18 months, the pace of condo starts is expected to decline
by close to 6% and resale prices should cool out west while still remaining
quite elevated. Calgary will see price growth drop from 26.6% in 2005/06 to
15% in 2007/08. Edmonton will slip from 16.6% to 12.5% over the same time
frame, and Vancouver from 16.3% to 10.5%.
    Central and eastern markets are more balanced and will not experience
major changes. Toronto price growth will slip marginally from 4.6% in 2005/06
to 4.2% in 2007/08, Ottawa price gains will rise slightly from 3.6% to 4.5%
and Montreal price growth will soften from 6.4% to 3.5%.
    "Our survey findings and the special report by TD Economics underscore
the continued rise in popularity of condos among Canada's city dwellers,
despite the expectation of softening in some markets," says Joan Dal Bianco,
Vice President, Real Estate Secured Lending. "This is good news for builders,
buyers and sellers as sustained growth brings greater choices for homeowners
and reduces economic risks from boom and bust cycles."

    Key Supportive Trends

    TD Economics found a number of short- and long-term drivers of the condo
market:

    -   Continued job creation will keep national unemployment at a 30-year
        low and maintain the employment-to-population ratio at a record
        level.

    -   Personal income will rise at roughly 4% per annum for the next two
        years, and consumer confidence should remain robust.

    -   Employment and income gains will be strongest out west, but Central
        and Eastern Canada will also experience solid labour market
        conditions.

    -   Mortgage borrowing costs will remain stable and low by historical
        standards.

    -   Five-year government bond yields, which track closely to five-year
        fixed mortgage rates, are expected to remain near current levels and
        rise only modestly in 2008. Thus borrowing costs should remain
        favourable for real estate.

    Other trends

    -   Given rapid increases in the price of detached dwellings in most
        cities, condos may be the only option for some homeowners -
        especially first-time buyers - in selected markets.

    -   Canada's aging population, who are also living longer and healthier
        lives, will prove positive for condos as seniors downsize in favour
        of properties requiring less maintenance.

    -   While overall population growth may slow, cities will continue to
        expand faster than rural communities. In 1901, 37% of Canadians lived
        in cities; in 2006 it reached 80%. Land scarcity and growing gridlock
        are contributing to an urban renewal trend that is fuelling the
        growth of condos in or near urban centres.

    -   Immigration will play an increasingly important role in population
        growth. Seven out of ten new arrivals in the past three years have
        settled in Toronto, Montreal or Vancouver - the cities with the
        largest condo markets. Their continued preference for these cities
        will support condo growth in the coming decades.

    "Some cooling is expected in Canada's major condo markets, but conditions
should remain healthy and the level of activity will be high," concludes Craig
Alexander.

For further information: A downloadable copy of "Condos To Remain An
Attractive Option for Many Home Buyers" is available at www.td.com/economics;
Craig Alexander, Vice President & Deputy Chief Economist, TD Bank Financial
Group, (416) 982-8064, craig.alexander@td.com