Rising interest rates and market uncertainty continued to impact the sale of new condos in the Toronto region over the summer months, according to a new report.
The number of condos sold through the period failed to reach the 3,000 mark, although the market showed some signs of improving, the industry survey suggests.
The report analyzed the sale of new units, not the resale of condos that were previously bought.
A total of 2,664 new condo units were sold throughout the GTA during the third quarter of this year, according to Urbanation’s Q3-2023 Condominium Market Survey.
While this marked a 41-per cent increase from a year ago, “when presale activity was effectively ground to a halt as interest rates began rising rapidly,” the Q3-2023 results still represented the second lowest third quarter total of the past 20 years.
Year-to-date new condo sales totaled 9,568 units, a 47-per cent decline from the same quarter in 2022, hitting their lowest level in 10 years, the Toronto-based real estate consulting firm said.
Urbanation said new condo sales were impacted by fewer project launches. The firm said 40 projects were expected to launch this year but “remain on the shelf.”
Those projects would have brought a total of 13,721 units to the region’s condo market.
“Elevated interest rates and heightened market uncertainty continued to grip the new condominium sector in the GTA,” said Shaun Hildebrand, president of Urbanation.
“While some new launches with competitive price points have seen success, many projects have been unable to make an economic case for proceeding in the current market, causing more supply to be put on hold.”
The report said while 2,491 units were successfully launched for presale during Q3-2023, this figure is down 23 per cent annually.
On a year-to-date basis, presale launches, totaling 13,197 units, are down 36 per cent annually.
Activity, however, is showing signs of improvement and there has been a “recent pick-up” in new presale launches, Urbanation said.
So far in Q4-2023, there have already been 19 condo projects and 6,916 units brought to market.
Prices for new condos are also on the decline, noted Urbanation.
Unit prices for projects launched for presale in the third quarter of this year averaged $1,216 per square foot, dropping 18 per cent from the record high average of $1,485 one year ago.
Average prices fell as buyers and developers “focused more of their activity on lower priced locations mainly in the 905 region,” which represented more than half of the total sales for the third quarter of 2023.
“As presale activity typically impacts construction starts with a 12-18 month lag, the slowdown in new condo sales that began in the second half of 2022 is expected to continue weighing on construction starts in the coming quarters,” Urbanation said.
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