Condominium sales have dropped to their lowest levels in a decade in the Greater Toronto Area, due to high interest rates and an unstable economy. The change has led many builders to put future projects on hold despite Canada’s growing housing supply crisis.
A report published by Urbanation, a condominium market analyst, found that 40 condo projects that were expected to be completed in 2023 have been put on hiatus. Those projects account for a total of 13,721 units.
The report revealed a 23% drop in condo presales in the third quarter when compared to last year, with only 2,491 units launched for presale in 2023.
“Elevated interest rates and heightened market uncertainty continued to grip the new condominium sector in the GTA,” said Shaun Hildebrand, president of Urbanation, in a news release.
“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.”
In 2023, only 9,568 units have been sold so far, a drop of 47% from the same time period in 2022 and the lowest level in the last 10 years.
According to the Urbanation report, the low presales are affecting builders’ decisions on construction.
“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,” reads the report.
However it’s not only presales that have dropped dramatically, but condo sale prices as well.
Third quarter new projects launched for presale averaged $1,216 per square foot in 2023, marking an 18% drop from the record high average in 2022 of $1,485 per square foot.
Both builders and buyers are now more focused on lower-priced locations, predominantly in the surrounding suburbs of Toronto, which made up 54% of sales in the third quarter.
Canada’s housing crisis continues to be at the forefront of people’s minds as more and more young Canadians have given up on the notion of ever owning a home. With the lowest number of housing units per 1,000 residents of all G7 countries, Canada currently faces the highest prices for housing in the G7.