The rapid and unprecedented growth of the real estate market in the Greater Toronto Area (GTA) has in the past year been a sight to behold. However, recent trends indicate a potential slow-down, with around 40 condo projects on hold amid rising interest rates and market uncertainty. Urbanation, a Toronto-based research and consulting firm, has estimated that an eye-opening 13,721 new condo units, which were expected to materialize in the Toronto housing market, have been paused. These shelved projects mark an evident halt of growth in the thriving GTA real estate environment.
Urbanation’s President, Shaun Hildebrand underlines “elevated interest rates” and “heightened market uncertainty” as the chief culprits for the challenges faced by the GTA’s new condo sector. Although cunning price points have allowed some new launches to be successful, many projects have been hindered by economic constraints, resulting in increased supply hold-ups.
In the third quarter of 2023, the number of units launched was 2,491 – a number down by a whopping 23% annually. In addition, the presale launches up until now in 2023 stands at 13,197 units, a significant 36% decrease when compared to the same time frame in 2022. Market indicators also portray a slow sales activity with only 2,664 new condo units sold, marking the Q3 2023 sales as the second slowest in two decades. Interestingly, more than half of Q3 sales were concentrated in the 905 regions, indicating a shift of construction activity towards lower-priced locations.
From the start of 2023 up until now, the number of new condo units sold stands at 9,568, down 47% compared to the first nine months of the previous year – marking a decade-low figure. A mentioned “recent pick-up” in presale launches with 19 condo projects and 6,916 units brought to market so far in the last quarter of 2023, however, cannot overshadow the expected prolongation of slow sales that will consequently affect the condo supply in future quarters.
With the slowdown in new condo sales beginning in the second half of 2022 and the associated impact on construction starting after a 12 to 18-month period, the slump in the GTA’s condo market may continue to manifest in the future as well. The shifting dynamics of this market call for deeper investigation and potential rectifications to ensure the future stabilization of the GTA’s housing market. Long story short – interesting times are on the horizon for the GTA’s real estate!