According to exclusive data from Zonda Urban, potential condo buyers in the Greater Toronto and Hamilton areas remain firmly on the sidelines.
After two years of double-digit annual drops in new multi-family home sales within the GTHA, 14,947 apartments and townhouses were sold in 2023. Yearly sales volume decreased by 36 per cent from the previous year after declining by 29 per cent from 2021.
The prolonged recession took its toll on condominium sales, which fell 44 per cent year-over-year to 11,629 purchases, the lowest level in more than 20 years. The yearly volume of townhouses rebounded 38 per cent to 3,255, marking a record point for the demand in 2023.
The sector started to suffer in the second half of 2023 due to the sluggish market for condominium apartments, with only 6,181 units sold in the summer and fall. In the fourth quarter, a multi-year quarter high of 1,400 units was taken off the market because projects were shelved for retooling or cancelled altogether. In addition, 1,105 more apartments in development that Zonda Urban has been monitoring are in receivership and will eventually be cancelled.
“Notwithstanding periods when the market seemed to have recharged and several successful launches during the first half of the year, overall, the 2023 market struggled to regain the momentum last seen in early 2022”, says Pauline Lierman, Zonda Urban’s vice president, market research.
“The slack in demand was heavily borne by condominium apartment projects. Developers pulled back—nearly 7,000 fewer apartment units were launched onto the market in 2023 than a year ago, yet despite this conservative approach and hefty incentive packages, the average absorption rate for new condominium apartment launches in their first quarter was just 38 per cent compared to a more normal 63 per cent absorption for 2022 launches and a strong 75 per cent first-quarter absorption rate for 2021 openings. For townhouses, the repricing first seen in late 2022 yielded results, with the average townhouse project launched in 2023 selling 45 per cent of their units at opening.”
For the GTHA in 2023, the development sector is finishing a record number of housing complexes. The total number of completed apartment buildings now occupied is 33,027, representing 27,297 condominium units and 5,730 purpose-built rental apartments — a three-decade high.
While Zonda Urban predicts that apartment completions in 2024 will almost reach 2023 levels, after 2025, there will be a significant decline in value. Only 1,973 condominium units began construction during the fourth quarter of 2023, a 54 per cent decrease in annual starts from the previous year to 14,040 units.
