In Q1 2023, the Greater Toronto Area had a 74% year-over-year decline in new condominium sales as high interest rates continued to dampen enthusiasm.
New data from Urbanation shows that only 2,360 new condo units were sold in the first quarter, which is a significant decrease from the record-high 9,242 sales witnessed in Q1 2022 and the weakest start to a year since the financial crisis in Q1 2009.
While the quantity of new pre-sale units brought to market decreased by 17% from the 10-year average, sales activity plummeted by 54%, indicating a sharp decline in demand. The average price per square foot for resale condos has decreased by 13%, which demonstrates the lack of trust among new purchasers.
Meanwhile, the average price psf for available new condos increased 2% year over year, to $1,434, marking the slowest pace of growth in eight years.
The number of unsold new condos jumped 73% annually in Q1 2023 to 16,299 units, its highest level in seven years. Inventory has risen significantly as well — the GTA has 13.2 months of new condo supply, up from a record-low of 3.2 months in Q1 2022 and well above the 10-year average of 8.4 months of supply.
Despite the dramatic declines seen throughout Q1 2023, Urbanization says there are early signs of stabilization in the GTA condo market.
Activity climbed to its greatest level in three quarters in the resale market, which frequently serves as a leading indicator for new condos. At the same time, the average price per square foot jumped 1.5% from Q4 2022. Additionally, the consultancy company observed that April saw a number of successful new pre-sale launches that should result in more projects in the months to come.
"While condo market activity in the GTA remained in a correction phase during the first quarter of 2023, buyers began to move off the sidelines more recently as interest rates stabilised," stated Shaun Hildebrand, President of Urbanation.
Condominiums' affordability advantage over other dwelling types and the high cost of renting should help the market grow in the future.
