Sales of new and presale condos plummet in the GTHA, data firm says

July 18, 2024 Canuck

Relatively very few people are buying newly built and presale condos in the Greater Toronto and Hamilton Area — but even with supply now at a record high, prices haven’t budged much.

Those are some of the key takeaways from the latest condo market update from Urbanation, a real estate data firm that’s been tracking housing sales in the region for more than 40 years.

The market survey focused on the second-quarter of this year, and the findings paint a bleak picture for condo sales.

Sales of newly completed and presale units were down 66 per cent year-over-year, and 70 per cent compared to the 20-year average for April through June, the update said.

That’s the lowest number of sales in that time period in the last two decades, with the exception of the second quarter of 2020 when the COVID-19 pandemic was ramping up in earnest, Urbanation said.

Sales figures were especially notable for presale condos. Of the 3,265 units put on the market, only 17 per cent were purchased — the lowest second-quarter uptake in 25 years.

For reference, over the last decade, on average 56 per cent of condos put on the GTHA presale market in the second quarter were sold, according to Urbanation.

The dramatic slowdown in the new and presale condo market means supply in the region has reached an all-time high of 25,893 units.

“When measured against sales over the past 12 months, unsold inventory equalled 34 months of supply — roughly three times higher than a balanced level of 10-12 months,” the update said.

Despite the supply gut, the average asking price for these types of condos has only dropped about 2.6 per cent in the last year, to $1,361 per square foot.

“This demonstrates how sticky new condominium prices have become due to high development and financing costs, and record prices paid for land at the market peak,” Urbanation said.

Elevated interest rates and an increase in the costs of materials and labour in recent years means developers need to keep real estate prices high to turn a profit, experts previously told CBC Toronto.

Urbanation noted that in recent months, developers have focused on finishing condo units already under construction in the GTHA, with completions reaching near record-high levels. But given development timelines, those projects have been in the works for years.

The outlook for new starts on condos continues to drop, fuelled in part by low sales numbers. Just 727 new condo units started construction in the GTHA in the second quarter of this year, the fewest in 20 years, Urbanation said. That’s a 67 per cent plunge year-over-year.

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Sales of new and presale condos plummet in the GTHA, data firm says

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