A report by TD economist Rishi Sondhi said sales activity didn’t absorb supply quickly enough, with condo resales within the GTA falling 25% from pre-pandemic levels in July.
Sondhi said the trend is linked to several aspects, including a wave of newly built condos entering the market, increased loan rates which can be making it difficult for some buyers to service their mortgages, and investors seeking to sell their properties because falling rents and negative money flow are making them unprofitable.
“The relatively high level of interest rates means that the gap between the yield on a condo in the GTA … and a risk-free government bond has narrowed,” he said within the Sept. 5 report.
“This may have reduced the incentive to hold a condo as an investment, although the recent decline in yields may help widen that spread again.”
Condominium completions within the GTA
Sondhi’s report shows that about 19,000 condominiums were accomplished within the region between January and July this 12 months, in comparison with about 12,000 in the identical seven-month period in 2023 and 10,000 the 12 months before.
The pace suggests there could possibly be a “record number” of condo completions within the GTA this 12 months, says Brendon Cowans, a sales representative at Toronto-based brokerage Property.ca.
“You can imagine that all this supply is being created in a high-interest environment. That’s not a nice combination,” he said.
According to data from real estate company Zoocasa, lively condo listings across the GTA increased 63.9% in July from the identical month last 12 months, from 5,416 to eight,879. The city of Toronto experienced an identical increase, with lively condo listings increasing 61.5% year-over-year in the course of the same period.
What is going on in other big cities?
Although the GTA leads the country in lively listing growth, the trend is in keeping with other major cities in Canada. Year-over-year, lively condo listings increased by greater than 40% in London, Hamilton-Burlington, Mississauga and Ottawa in Ontario, in addition to in Vancouver. Montreal and Calgary each saw growth of about 23%.
