Multi-family housing sales in the GTHA continued its downward trend through the back half of 2022, with condo, townhouse and apartment sales levels all declining over 50 per cent on a year-over-year basis.
Despite a strong start at the beginning of the year, market activity fell off a cliff in the face of rising interest rates and deteriorating affordability.
“2022 was a year of extremes for the multi-family market in the GTHA,” Pauline Lierman, Vice President Market Research for Zonda Urban said. “The pace of sales tested historic highs at the start of the year – first half sales were ahead by 3 per cent over 2021, then the successive interest rate hikes inverted those gains to a 60 per cent year-over-year drop during the second half.”
Overall, a total of 23,391 multi-family units were sold in the GTHA during 2022, the majority of which were condominium apartments.
Condominium apartment sales fell 26 percent on an annual basis to 21,027 units. Sales of ground-related townhouse products were just as abysmal, falling 54 per cent from last year.
“Our fourth quarter surbey noticed a few substantial price reductions. Select townhouse projects dropped prices between $200,000 and $300,000 per unit,” Lierman said. “Notably, these were from larger developers and for long-term multi-phase properties. While outright price reductions were not a factor at condominium apartment projects, the scale of incentive packages was upped significantly.”
Newly-launched developments in downtown Toronto and Hamilton that had incentives and transit-friendly locations bumped up to a moderate level of sales activity in Q4-2022, with absorption rates increasing for the first time in the last three quarters.
Twenty-one new condominium developments kicked off sales during Q4-2022, selling 62 percent of the total 5,242 available new units. Average price for said units came to $830,000 at $1,269 per square foot (PSF).
Twelve new townhouse developments were brought to market during the same period, showing a much slower absorption rate of 36 percent of the 472 new units. The average new townhouse unit sold for $1,075,000.
“Indications on our site tours in early January suggest competitive pricing is bringing about a pick-up in demand, with more traffic at sales offices and traction through the broker networks,” Lierman said. “We still anticipate though a modest first quarter [of 2023] with around 4,000 apartment units launching in the market, half of that of Q1-2022.”
New supply in the GTHA’s rental and resale markets was slightly improved in 2022, with 15,019 units reaching completion – 443 more units than 2021. As rental market conditions in the area remain tight, supply will be at the forefront of consumers’ minds in the coming year.
Zonda Urban estimates that 28,379 new condominium apartment units will reach completion in 2023. However, this number may be cut down to around 25,000 units due to the stretched labour force and construction delays.