The Greater Toronto and Hamilton Area multi-family market can’t catch a break these days.
Things were looking up for the market in March and April. Developers were experiencing strong interest in the 905 region and outer 416 openings. But that spring sprout has been dragged down in Q2, as any demand momentum for early condominium apartment and townhouse project launches slowed with the latest interest rate hike in June by the Bank of Canada.
This is a familiar pattern when compared to last year’s Q2 results. Multi-family apartment and townhouse sales totaled 6,129, a 10 per cent drop from Q2-2022. Sales of condominium apartments dragged down the quarterly results, falling 18 per cent year-over-year to 4,914.
However, new releases and launches spurred a resurgence in townhouse sales, which rose 57 per cent year-over-year to 1,215, the highest quarter for townhouse sales since Q4-2021.
“Heading into Q2-2023, there was lots of uncertainty—the industry was not keen to bring new projects to the market amid the slow demand extending the last half of 2022 into the first quarter”, said Pauline Lierman, Zonda Urban’s vice president, market research. “We expected that the market would flip from preceding years with strength shifting from the spring into the fall months.”
“The early successes of key 905 Region new openings changed this outlook. Developers essentially found the sweet spot of product, pricing, and, most importantly, location, that renewed demand. Suddenly, launches were occurring every second day through May into June until the most recent rate hike, which slowed the market once again.”
Delivery of completed condos is rising
An increasing number of condominium owners are receiving their new homes at a faster rate.
Completions of apartment units hit a record high in the GTHA in Q2, with 7,981 units in buildings were beginning to experience occupancy by their respective residents. The 13,689 completed condos during the first half of 2023 were nearly equal to all completions in 2022, with an additional potential 14,265 units expected to complete during the year’s second half. This number is within Zonda Urban’s previous forecast of 25,000-plus completions for 2023. Meanwhile, total apartment construction was essentially unchanged at 119,052 units, including 101,592 as condominiums and 17,460 as rentals.
