Affordability challenges reverberated through the Greater Toronto Area’s (GTA) new condo market in 2023, and new data shows that buyers simply weren’t biting as the year drew to a close.
Urbanation reported on Thursday that 22,477 new condominium units went unsold in the GTA in the final quarter of the year. That number marks a “record high” and is up 41% year over year.
The Toronto-based research and consulting firm said that new condo inventory was equal to 21.2 months of supply in the quarter, which is “roughly double” the 10 to 12 months of inventory that would be considered “a balanced level.”
“The slowdown in new condominium sales in 2023 resulted in a substantial increase in pre-construction projects with low absorption levels at year-end,” the firm also noted.
“As of Q4-2023, a 31% share of pre-construction projects in the GTA sold less than 30% of their units, more than doubling the share in Q4-2022 (14%). Two years earlier in Q4-2021, there were no pre-construction projects that were less than 30% sold.”
Urbanation
Over the whole of 2023, new condo sales plummeted a whopping 41% compared to the year prior, with just 12,716 transactions recorded. Last year was only the third time in the past 20 years that annual sales were below 13,000 units, and marked the slowest year for new condo sales since 2008.
In addition, just 19,261 new condo units were launched last year — a 24% decrease over 2022 — according to Urbanation’s data. The projects that did manage to launch only sold an average of 48% of their units. The absorption rate for new launches was 65% in 2022 and 82% in 2021.
Construction activity also plunged 45% in 2023 to just 15,891 units, with majority of those starts concentrated in the first half of the year. By contrast, just 4,397 starts were recorded in the second half of 2023.
Meanwhile, 20,165 new condominiums reached occupancy in 2023, marking a three-year high. A record number of units — 26,934, to be exact — are scheduled for occupancy in 2024.
“2023 was one of the most difficult years for the GTA condominium market in recent history,” said Urbanation President Shaun Hildebrand. “While some improvement in sales activity can be expected given record-high population growth and an expected reduction in interest rates, the market will continue to face challenges as it works through a large number of completions this year.
“Looking forward a few years from now, the sharp reduction in new condo sales and construction starts experienced in 2023 will create severe supply shortages for the market.”
