According to a report from Urbanation, sales in the once fruitful Toronto condo market have hit a 35-year low, as no new projects were launched in the Greater Toronto and Hamilton Area (GTHA) in the first quarter of the year. Now entering its fifth year, the market downturn is being exacerbated by the rising inventory as the market experienced record numbers of condo completions over the last several years. While this has placed downward pressure on prices, demand is still weak, which is causing inventory to swell and the market to weaken further, as unsold units continue to sit on the market for months.
As of the first quarter, a record 4,295 new condominiums were completed and unsold, more than double the figures from the previous year, while another 8,629 unsold new condos are still expected to hit the market in the coming years.
Only 246 new condominiums were sold across the GTHA in the first couple of months of the year, with sales down 54 percent over the previous year and a whopping 94 percent below the 10-year average.
“After the condo market sank to a new multi-decade low in the first quarter, it was encouraging to see a number of new initiatives announced that should help improve sales, reduce inventory and get more construction underway,” said Shaun Hildebrand, president of Urbanation. “However, with market confidence still very fragile and demand fundamentals slowing down, the recovery process is likely to begin slowly,” he said, which will see additional help from the government’s recently announced full HST rebate.
Developers have had no other recourse but to cut prices, with the average asking price for unsold new condominiums down to $1,189 per square foot, a decrease of five percent year-over-year and 13 percent below peak levels from three years ago.
