GTA New Condo Sales Fell to 15-Year Low in 2023

TORONTO – February 01, 2024:   Urbanation Inc., the leading source of information and analysis on the condominium market since 1981, released its Q4-2023 Condominium Market Survey results today.

New Condo Sales Fell 41% in 2023 to 15-Year Low

The 12,716 new condominium sales in the GTA during 2023 fell 41% from 2022 (21,433) and 58% from 2021 (30,619), representing the slowest total since 2008 (12,593). It was only the third time in the past 20 years that annual sales were below 13,000 units, deviating substantially from the long-term trend level of close to 25,000 units. GTA new condominium sales totaled 3,070 units in Q4-2023, declining 10% year-over-year.

New condominium projects that launched for presales in 2023 sold an average of 48% of their units, dropping from a 65% absorption rate for new launches in 2022 and a record high 82% absorption rate for new launches in 2021. The 10-year average absorption rate for new presale launches was 67%. 

905 Region Market Share Increases

The 6,498 units sold in the City of Toronto in 2023 dropped 48% from 2022 to a more than 20-year low, whereas the 6,218 units sold in the 905 Region of the GTA declined 30% annually to a five-year low. The share of new condo sales in the 905 Region increased from 41% in 2022 to 49% in 2023.

Unsold Inventory Reaches Record High

Condominium developers launched a total of 19,261 units in 2023, down 24% from 2022 and 13% below the 10-year average. With sales slowing much faster than new supply entering the market, total unsold new condominium inventory increased 41% year-over-year to 22,477 units in Q4-2023, representing a record high. Inventory was equal to 21.2 months of supply — roughly double the 10-12 months considered to be a balanced level. The 15.5 months of inventory in the 905 Region was substantially lower than the 26.7 months of supply in the City of Toronto.

The slowdown in new condominium sales in 2023 resulted in a substantial increase in pre-construction projects with low absorption levels at year-end. 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.

Construction Activity Plunges

The 15,891 units that started construction in 2023 represented a 45% decline from 2022. Construction activity slowed considerably in the second half of 2023, recording only 4,397 starts — a 72% plunge from the same period in 2022. [Note: that Urbanation defines construction starts at excavation, which is earlier in the process than CMHC’s definition for starts occurring at foundation].

Condo Completions Will Continue to Grow

Condo completions are expected to continue to ramp up in 2024. Following the 20,165 new condominiums that reached occupancy in 2023, a three-year high and only the third time that completions breached the 20,000-unit level, a record-high 26,934 units are scheduled for occupancy in 2024. While inevitable delays are likely to cap completions below this level, there are currently 17,918 units scheduled for the first half of the year, which should result in completions for 2023 exceeding the 2020 high of 22,473 units. 

Average New Condo Price Decreases to Two-Year Low

The overall average asking price for remaining unsold new condominiums in the GTA was $1,403 psf, decreasing 2% annually to reach a two-year low. Unsold prices were down 4% annually in the City of Toronto to an average of $1,524 psf, while increasing 1% annually in the 905 Region of the GTA to a record high $1,186 psf. Developers continued to increase incentives in the fourth quarter, with cash back offers, reduced deposits and higher broker commissions becoming more common.

“2023 was one of the most difficult years for the GTA condominium market in recent history. 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.”

                                    --Shaun Hildebrand, President of Urbanation