New condominium sales plummeted to a 27-year-low during the first six months of 2024 as a “sharp downturn in construction starts” in Toronto continued to impact inventory levels, a new report by a real estate research group suggests.
Urbanation Inc. says that just 3,159 new condo units were sold in the Greater Toronto and Hamilton Area during the first half of the year, representing a 57 per cent decline from the same time period one year prior and a 72 per cent drop as compared to the 10-year average.
Urbanation says that it was also the slowest first half for new condo sales since 1997.
“With condo prices still near record highs and only a modest 25 basis point decline in interest rates in June from their 22-year high, buyers remained cautious in anticipation of further rate cuts and amidst a burgeoning supply of units for sale,” Urbanation President Shaun Hildebrand said in a news release. “The continued weakening in condo market conditions during the second quarter of 2024 is likely to cause more projects that were slated to launch this year to remain on hold, while others that are struggling to meet sales thresholds for construction financing may ultimately be pulled from the market.”
Urbanation says that the total number of unsold condo units in the GTHA has now reached a record high of 25,89, which equates to about 34 months of supply. That is approximately 10,000 more units than the long-term average, the group points out.
However, despite the surplus prices have remained relatively stable.
Urbanation says that the average asking price for unsold units declined just 2.6 per cent over the past year and by only 4.5 per cent over the past two years.
“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,” the release notes.
The GTA’s real estate market has faced significant headwinds over the last two years due to a significant increase in the price of borrowing.
In June the average selling price of a home in the Greater Toronto Area across all property types was $1,162,167. That is down from a peak of $1,334,062 in February 2022, which was the prior to the Bank of Canada beginning its interest rate hiking cycle.