Apartment Deliveries at Record Pace as Townhouse Demand Stays Steady
TORONTO, July 23, 2024 /PRNewswire-PRWeb/ -- Zonda Urban today released its Q2-2024 Greater Toronto and Hamilton Area (GTHA) multi-family market survey results.
The spring "bump" failed to emerge in the Greater Toronto and Hamilton new multi-family market during the second quarter of 2024. While the initial cut in the interest rate by the Bank of Canada in June was welcomed, demand for new apartment and townhouse units held off, with sales falling 61% year-over-year to 2,411 units. New condominium apartment sales in the second quarter were a third of the volume of a year ago at 1,644, culminating in the slowest first half of the year in the post-2000 era. The 767 townhouses sold during Q2-2024 was a 42% dip relative to a spike in activity a year ago; however, 12-month townhouse sales are up 22% over 2023 with ground-related new units showing a steady volume of activity amidst a weak market.
Some condominium apartment developers did test the market during the second quarter with 10 new projects launched. Spread across the GTHA, including downtown Toronto, absorptions at these openings remained a challenge, with 18% of the 3,555 total units sold during the quarter at an average of $1,202 psf, 2% lower than the average sold index price for Q2-2023 new openings. Nineteen new townhouse projects opened in the second quarter selling 83% of released units at an average price of $1.151 million (1,969 sf average unit size). Although price declines have been prevalent in the townhouse market, a smaller growing number of new condominium apartment projects are reducing prices, mostly concentrated in developments with inventory under construction.
"The development industry at present is predominantly in three modes: deliver, plan and wait." says Pauline Lierman, Zonda Urban's vice president, market research. "Buyers are waiting for the interest rate trend to unfold, and major pre-construction brokers are taking a step back for the summer. Seeing through successful closings of previously sold buildings is a significant concern for many GTHA developers as annualized completions have stayed at a record pace. As of June, our research team tracked 27,501 units in buildings that started occupying over the past 12 months, including 13,893 during the first half of this year." Zonda Urban estimates an additional 16,313 units will begin occupancy during the latter half with the high volume enduring through to the fall of 2025, when new supply is expected to free fall. Slow sales and lack of construction starts are making the 2027 onwards supply outlook difficult with just 7,807 units expected to deliver in 2027 that are already under construction.
10,885 new condominium apartment units started construction over the past 12 months, including 3,183 in the second quarter, a 60% year-over-year decline. With completions at nearly triple the rate, new condominium apartment units under construction in the GTHA declined 15% year-over-year to 86,742.
The Q2-2024 Zonda Urban GTHA multi-family take report will be released shortly with further insight into the market.
Methodology
Zonda Urban provides insight on multi-family and rental housing activity in the Greater Toronto and Hamilton, Ottawa, London, Winnipeg, Halifax, St. Catherines-Niagara, Kitchener-Waterloo, Vancouver, Victoria, Calgary, Kelowna, Nanaimo and Edmonton markets, utilizing primary sourced data from developers, their representatives and brokerages.
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About Zonda
Zonda provides data-driven housing market solutions to the homebuilding industry. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.
Media Contact
Valerie Sheets, Zonda, 949-294-9557, [email protected], zondahome.com
SOURCE Zonda
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