New condo sales in the Greater Toronto Area are at their lowest since 2008 at 12,716 units, according to new data from Urbanation. Over the past 20 years, there have been two other times where sales have fallen below 13,000 units, but the long-term trend has been close to 25,000 sales annually.
Last year, the units sold represented a 41 per cent decline from 2022 and a 58 per cent fall from 2021. In Q4, there was a decline of 10 per cent year-over-year with 3,070 units sold.
“2023 was one of the most difficult years for the GTA condominium market in recent history, said Shaun Hildebrand, president of Urbanation. “While some improvement in sales activity can be expected given record-high population growth and an expected reduction in interest rates, the market will continue to face challenges as it works through a large number of completions this year. Looking forward a few years from now, the sharp reduction in new condo sales and construction starts experienced in 2023 will create severe supply shortages for the market.”
New condominium projects that launched for presales in 2023 sold an average of 48 per cent of their units, dropping from a 65 per cent absorption rate for new launches in 2022 and a record high 82 per cent absorption rate for new launches in 2021. The 10-year average absorption rate for new presale launches was 67 per cent.
Sales in 905 and City of Toronto
The 6,498 units sold in the City of Toronto in 2023 dropped 48% from 2022 to a more than 20-year low, whereas the 6,218 units sold in the 905 Region of the GTA declined 30% annually to a five-year low.
The share of new condo sales in the 905 Region increased from 41 per cent in 2022 to 49 per cent in 2023. There were 6,218 units sold, a drop of 30 per cent annually to a five-year low compared to a 48 per cent drop in the City of Toronto with 6,498 units sold— a more than 20-year low.
Record high unsold inventory
Condo developers launched 19,261 units in 2023, down 24 per cent from 2022 and 13 per cent below the 10-year average.
Sales slowed much faster than new supply entering the market, with new inventory increasing by 41 per cent year-over-year to a record high of 22,477 units in Q4-2023. The 15.5 months of inventory in the 905 Region was much lower than the 26.7 months of supply in the City of Toronto.
The slowdown in new sales in 2023 resulted in a substantial increase in pre-construction projects with low absorption levels at year-end. As of Q4-2023, a 31 per cent share of pre-construction projects in the GTA sold less than 30 per cent of their units, more than doubling the share in Q4-2022. Two years earlier in Q4-2021, there were no pre-construction projects that were less than 30 per cent sold.
New condo price drops to two-year low
The average asking price for remaining unsold new GTA condos was $1,403 psf, decreasing two per cent annually to reach a two-year low. Unsold prices were down four per cent annually in the City of Toronto to $1,524 psf, while increasing one per cent in the 905 region to a record high $1,186 psf.
Developers continued to increase incentives in the fourth quarter, with cash back offers, reduced deposits and higher broker commissions becoming more common.
Construction activity slowdown
There were 15,891 units that started construction in 2023, a 45 per cent decline from 2022. Construction activity slowed considerably in the second half of 2023, recording only 4,397 starts — a 72 per cent drop from the same period in 2022. Urbanation says it “defines construction starts at excavation, which is earlier in the process than CMHC’s definition for starts occurring at foundation.”
Condo completions
Condo completions are expected to multiply in 2024. Following the 20,165 new condominiums that reached occupancy in 2023, a record-high 26,934 units are scheduled for occupancy in 2024.
Delays are likely to cap completions below this level, but there are currently 17,918 units scheduled for the first half of the year. Urbanation explained this should result in completions for 2023 exceeding the 2020 high of 22,473 units.
