According to the Q3-2022 condo market survey from Urbanation, new condo sales in the Greater Toronto Area amounted to 1,748 units, declining 79 per cent from a year ago.
During the initial months of the pandemic in Q2-2020, 1,585 units sold. This was the lowest quarter for GTA new condo sales since the financial crisis in Q1-2009 (887 sales). A record 189 projects in development reported zero sales during the quarter, a 67 per cent share of total projects with available inventory.
Presale purchasers moved to the sidelines amid heightened market uncertainty caused due to the rapid increase in interest rates. Facing slow sales and high costs, developers pulled back on launching new projects.
The 2,857 new units launched for presale in Q3-2022 was down 67 per cent from the same period last year (8,627 launches) and 32 per cent below the 10-year average for Q3 (4,181).
While there has been a pick up in new launch activity in Q4-2022 with 4,591 units launched so far in October, the market remains on track to see about 10,000 units delayed for launch this year. With sales absorption at new launches falling to a more than decade low of 26 per cent in Q3-2022, developers are expected to remain cautious in bringing new pre-construction projects to the market in the near-term.
The slowdown in new condominium sales and presale launches is not expected to negatively impact construction activity until the second half of 2023, as developers will remain active in the next few quarters starting work on the large number of units that launched and sold in previous quarters.
The 8,953 new condominiums that started construction in Q3-2022 was up 40 per cent year-over-year and represented a record high for the GTA, pushing the total number of units under construction to a record 96,510.
Low condo inventory levels and high development costs continued to put upward pressure on new condominium prices. Projects that launched for presale during Q3-2022 opened with record high average prices of $1,380 psf, based on an average unit size of 642 sf.
While the average price for all available units in the market at $1,427 per square foot in Q3-2022 declined by one per cent from the record high in Q2-2022 ($1,440 psf), prices remained 15 per cent higher than a year ago ($1,244 psf).
By comparison, the average price for resale condominiums in Q3-2022 declined 5 per cent quarter-over-quarter to $891 psf and 10 per cet from the record high reached in Q1-2022 ($988 psf), creating a record wide discount compared to new condominium prices.
“Condo investors and developers adopted a wait-and-see approach to determine the impact on the market from higher interest rates, resulting in very little sales activity in Q3,” said Shaun Hildebrand, President of Urbanation. “While the surge in construction was a positive sign for new supply, it will ultimately be short-lived unless market confidence improves.”
