There was no spring bloom in the Greater Toronto and Hamilton Area’s (GTHA) new multi-family market in the second quarter, according to exclusive data from Zonda Urban.
A distinct lack of growth was apparent in the sector during Q2-2024. The Bank of Canada’s decision to lower the interest rate in June was met with relief by potential homeowners. However, the demand for new apartment and townhouse units did not follow suit, as sales experienced a significant decline of 61 per cent compared to the previous year, with only 2,411 units sold.
Declines across both GTHA new multi-family market sectors
Condominium apartment sales in the second quarter plummeted to 1,644 units, marking a significant decline compared to the previous year from 4,914 in Q2-2023. This resulted in the slowest first half of the year since the post-2000 era. There were 767 townhomes sold during Q2-2024, compared to 1,826 at the same time last year. That represents a drop of 42 per cent.
However, when looking at the 12-month townhouse sales, there has been a positive increase of 22 per cent compared to 2023. Ground-related new units have maintained a consistent level of activity despite the overall weakness in the market.
Consumers looking to enter the GTHA new multi-family market have “a lot of choice”
What does this mean for the average consumer seeking to purchase within the multi-family market in the GTHA? Livabl spoke to Pauline Lierman, Zonda Urban’s vice president of market research for additional insight.
“The current dynamics of the new multi-family market is providing a lot of choice for would-be pre-construction buyers,” Lierman said. “High inventory and the absence of sell-outs seen over the past few years offers an opportunity particularly for end-user purchasers to shop around and negotiate with probably the best packages of incentives and deposit structures the market has seen since the mid-2000s.”
“That choice also extends to the rental market where new builds and high deliveries of new condo units has eased rent growth, especially in major downtown markets like Toronto which had seen tight vacancy up until mid-last year.”
10 new condos launched in the GTHA during Q2-2024
During the second quarter, several condominium apartment developers decided to test the market by launching 10 new projects. Located throughout the Greater Toronto and Hamilton Area, including downtown Toronto, the sales performance at these new developments proved to be difficult. Out of the total 3,555 units available, only 18 per cent were sold during the quarter, with an average price of $1,202 per square foot. This average price was two per cent lower than the average price of units sold in the second quarter of 2023.
In the second quarter, a total of nineteen new townhouse projects were launched, with an impressive 83 per cent of the released units being sold. These townhouses were sold at an average price of $1.151 million, with an average unit size of 1,969 square feet. In the townhouse market, prices have been decreasing, but there is also a noticeable trend of new condominium apartment projects lowering their prices. This is mainly happening in developments that are still under construction.
The wait continues in the GTHA new multi-family market
“The development industry at present is predominantly in three modes: deliver, plan, and wait,” Lierman said. “Buyers are waiting for the interest rate trend to unfold, and major pre-construction brokers are taking a step back for the summer. Seeing through successful closings of previously sold buildings is a significant concern for many GTHA developers as annualized completions have stayed at a record pace. As of June, our research team tracked 27,501 units in buildings that started occupying over the past 12 months, including 13,893 during the first half of this year.”
