High interest rates and deteriorating affordability have pushed prospective homebuyers back onto the sidelines across the Greater Toronto Area.
According to a new report from the Building Industry and Land Development Association (BILD), 1,190 new homes were sold across the GTA in July, an 18% annual decline.
The figure, courtesy of data from Altus Group, sits 50% below the 10-year average and marks a "considerable" slowdown in the new home market.
"GTA new home sales slumped in July," said Edward Jegg, Research Manager at Altus Group. "The latest interest rate hikes have pushed many buyers to the sidelines again as affordability continues to deteriorate."
Just 828 condominium apartments changed hands across the region in July, the lowest sales figure for the month in 23 years. Accounting for units in low, medium, and high-rise buildings, as well as stacked townhouses and lofts, sales declined 39% annually and came in 50% below the 10-year average.
Meanwhile, sales of new single-family homes, including detached, linked, and semi-detached houses, as well as townhouses, soared, rising 281% year-over-year in July. However, last summer marked a significant cooling of the market as buyers began to react to rising interest rates. As such, the July 2023 sales figure was 51% below the 10-year average.
Between slowing sales and rising inventory — which increased to 16,683 units in July — home prices dipped. The benchmark price for new condos fell 9% year-over-year to $1,084,768, while the benchmark price for new single-family homes hit $1,673,696 in July, a 13.5% annual decline.
"It is time the federal government recognized its role in helping provinces, municipalities, and the industry meet housing demand pressures for which its own policies and federal institutions are in part responsible," said Dave Wilkes, the President and CEO of BILD.
"The measures within the government’s scope that can help with affordability and new housing supply include deferring HST on purpose-built rentals, helping municipalities financially to deliver infrastructure that supports housing, and indexing the thresholds for the GST/HST new housing rebate. We call on the federal government to act with the urgency the situation demands."
The call echoes the recommendations put forth by the National Housing Accord last week, which offer the federal government a blueprint to build two million purpose-built rentals by 2030, and restore affordability. Several of the authors have also urged the Government of Ontario to create a comprehensive plan to meet its target of building 1.5 million homes by 2031.