Toronto condo prices keep rising despite slowing sales: Survey

Condominium prices in Toronto once again soared to a record high in the second quarter of 2022 despite a decline in overall sales.

The recent survey from Urbanation Inc. showed there were 6,792 condo units sold through April, May, and June, down 19 per cent from the first quarter of the year and down 24 per cent year-over-year.

“The new condominium market is likely to continue slowing in the near-term from last year’s record highs as presale buyers act cautiously and developers delay new openings, with a focus on finishing projects already underway,” says Urbanation president Shaun Hildebrand.

Source: Urbanation

Condo developers are starting to slow the pace of construction with sales slowing down as borrowing costs rise — a trend that is expected to continue as the Bank of Canada tightens policy. Pre-construction sales have slowed by 18 per cent with many buyers who were looking at condos as an investment getting cold feet expecting borrowing costs to keep climbing.

“Prices are expected to hold firm amid low inventory and high development costs,” says Hildebrand.

“The strength in the rental market and shift in demand towards more affordable ownership options should provide support for condominium activity as the market works through the effects of higher interest rates.”

The market analysts at Urbanation say at the start of the year, the city was on pace for 35,000 condo unit starts, and about 16,000 were brought to market in the first half of the year. Less than 10,000 units are expected during the rest of the year, which leaves 10,000 units that will remain on the shelf.

The analysts estimate that buyers of newly completed condos trying to recoup their expenses through rental income will face an average monthly shortfall of $1.06 per square foot, or the equivalent of nearly $700 per month on a 650-square-foot unit.

Source: Urbanation

There is still a record number of new condos in pre-construction or under construction in the GTA and there is now a greater number in development in the 905 region than in the old City of Toronto.

There are more than 50,000 units in development in the 905 compared to more than 46,000 in the former City of Toronto. Another 26,000 units are in development in the outer Toronto regions of North York, Etobicoke, York, East York, and Scarborough.

Despite the slowdown, the number of condo sales in the city remains above the 10-year average for the second quarter.