The evidence is building that Toronto’s long-booming condo market is experiencing a sudden and sharp downturn.
Market research group Urbanation reports that new condo sales in Toronto fell 30 per cent from the second quarter of this year to the third. The year-on-year decline was even steeper: There were 3,317 condo sales in Toronto from July to September of this year, down from 6,318 condo sales in the same period of 2011 — a 47.5-per-cent drop.
If current sales rates continue, new condo sales will be 35 per cent lower this year than last, Urbanation said.
The research group says developers are reacting quickly to the drop, and pulling back on new projects.
“With slowing sales and a record level of unsold inventory in the market in the second quarter, condominium developers reacted quickly by delaying their project launches, especially in the ‘416’ area,” Urbanation executive VP Ben Myers said in a statement. “Just five projects launched in Toronto in Q3-2012, as developers chose to review their pricing assumptions and unit mix”.
This chart from real estate market analyst shows the supply of downtown Toronto condos (the black line) higher throughout the year than in any of the previous five years
But even with the slowdown in new launches, Toronto still has a record high 207 projects under construction, amounting to 56,336 new condos, Urbanation said.
And the last few months have seen the announcement of several major new downtown development projects that could add a considerable amount of condo space to the city’s supply.
Toronto theatre mogul David Mirvish is planning to develop three condo towers of more than 80 stories each, among the tallest residential buildings on the continent, to be designed by renowned architect Frank Gehry. A $3-billion casino and retail complex proposed for the downtown core would also include considerable amounts of condo space.
Upward pressure on condo prices is fizzling. Urbanation says condos prices per square foot were up two per cent in the quarter, compared to the same period in 2011. But considering that prices were up 7.2 per cent in the second quarter, this would suggest Toronto condo prices are beginning to flatline.