In a striking report from Urbanation, a leading development research firm, the Greater Toronto Area (GTA) experienced a dramatic decrease in new condominium sales in 2023, marking the most challenging year since the 2008 Great Recession. Despite record population growth, developers saw a significant downturn, with sales dropping to just 12,716 units — a 41% decrease from the prior year and a stark 58% fall from two years ago. This downturn represents the lowest sales figures the fast-expanding GTA has witnessed since the financial crisis of 2008.
Suburban Areas Show Relative Resilience Amidst Widespread Declines
While the downtown Toronto market suffered, the suburban areas within the 905 region demonstrated somewhat greater demand resilience. The City of Toronto accounted for 6,498 of the total sales last year, experiencing a 48% decline. In contrast, the 905 suburbs saw a smaller reduction of 34%, totalling 6,218 sales, indicating a continued preference for suburban living.
Record High Unsold Inventory Highlights Market Challenges
The aftermath of a construction surge has left the GTA with an unprecedented level of unsold new condo inventory. By the fourth quarter of 2023, developers found themselves with 22,477 unsold units — the highest ever recorded, translating to a 21.2-month supply. This figure is double what is considered necessary for a balanced market, signalling a distinct shift towards a buyer’s market where prices are poised to decline.
Construction Slowdown Amid Lower Prices
With falling prices, the motivation for new construction has waned significantly. Despite governmental efforts to stimulate the housing market through various incentives, the number of new projects launched in 2023 fell by 24% to 19,261 units in the GTA, underscoring a 13% drop from the 10-year average. This decline reflects a market adjustment following a period of low-interest-rate-induced demand, highlighting the challenges faced by the sector despite aggressive population growth and policy incentives aimed at encouraging development.
This downturn is a critical indicator of the current state of the real estate market in Greater Toronto, reflecting both the cyclical nature of the market and the impact of external economic factors on housing demand and supply dynamics.
