New condominium sales across the Greater Toronto Area fell 74% year over year in Q1 2023 as high interest rates continued to hinder demand.

According to new data from Urbanation, just 2,360 new condo units were sold in the first quarter, the slowest start to a year since the financial crisis in Q1 2009 and a sharp drop from the record-high of 9,242 sales seen in Q1 2022.

Gta condo sales 1Urbanation

While the number of new pre-sale units brought to market fell 17% below the 10-year average, sales activity dropped 54% below the 10-year average, signalling a significant drop-off in demand. There is also lagging confidence amongst new buyers, as evidenced by a 13% drop in the average price psf for re-sale condos.

Meanwhile, the average price psf for available new condos increased 2% year over year, to $1,434, marking the slowest pace of growth in eight years.

Gta condo sales 2Urbanation

The number of unsold new condos jumped 73% annually in Q1 2023 to 16,299 units, its highest level in seven years. Inventory has risen significantly as well -- the GTA has 13.2 months of new condo supply, up from a record-low of 3.2 months in Q1 2022 and well above the 10-year average of 8.4 months of supply.

Gta condo sales 3Urbanation

Despite the dramatic declines seen throughout Q1 2023, Urbanization says there are early signs of stabilization in the GTA condo market.

The re-sale market, which tends to act as a leading indicator for new condos, saw activity rise to its highest level in three quarters, while the average price-per-square-foot increased 1.5% from Q4 2022. As well, a number of successful new pre-sale launches were seen in April, which the consulting firm noted should lead to more projects in the coming months.

"While condo market activity in the GTA remained in a correction phase during the first quarter of 2023, buyers began to move off the sidelines more recently as interest rates stabilized," said Shaun Hildebrand, the President of Urbanation.

"The affordability advantage condominiums hold over other housing types and the high cost of renting should add some momentum to the market moving forward."