Multi-family housing sales have plummeted by 61 per cent year-over-year in the Greater Toronto and Hamilton Area (GTHA), but construction remains strong, reports Zonda Urban.
Overall sales volumes for multi-family housing in Q3 represent a post-pandemic low in the area, due in part to rapid increases in the Bank of Canada’s overnight rates. Townhome sales dropped to 180 units sold, and condominium apartments saw a 58 per cent decline compared to last quarter.
But it’s not all bad news for condo sales. The old City of Toronto rebounded from its long-term decline, accounting for 40 per cent of new condominium apartment sales in Q3. Downtown Hamilton also snuck up the ranks, leading all sub-markets for growth in sales activity.
While overall sales rates dropped in Q3, so did the number of new launches. With only 14 new projects in the GTHA, launch activity was nearly halved compared to earlier this year, the fewest number of new projects released to the market since the start of 2021.
But it’s not time to call an annual slowdown just yet. When looking at the total number of launches this year, the slowing pace of activity in Q3 is still bolstered by strong activity in the beginning of the year. New housing supply for 2022 is still on pace with 2021, with the total number of new units sitting at 27,613 – just 1,307 fewer units than what was recorded last year.
Over the course of the year, the Bank of Canada increased its overnight rates by 3.5 per cent since March. As homebuyers flinched under the pressure of increased interest rates, extended incentives and cash-back programs have become the norm for projects launched in Q4. The combination of increased incentives, slower sales activity and higher interest rates appear to have slowed down price growth for multi-family homes in the GTHA.
Since the end of 2021, the average blended index price has only risen three per cent for condominium apartments and 7 per cent for townhouses.
Slow launch and sales activity across Q3 don’t mean less homes for GTHA residents, as construction in the region is booming. Condominium apartment starts have accelerated throughout 2022 with Q3 reaching a record 11,379 – 45 per cent of the total number of units that began construction this year.
Currently, 104,177 new units are under construction across the GTHA, most of which are projects launched within the last 12 months. Based on current construction progress, an estimated 31,916 units are anticipated to be delivered during 2023 – with more on the way in successive years.
While project delays are inevitable, early projections suggest an upcoming surge in condominium apartment completions and purchasing opportunities in the resale market.
