New condo sales in the Greater Toronto and Hamilton Area (GTHA) sank in 2025 to their lowest level since 1991, capping a four‑year correction that has reshaped one of Canada’s most investor‑driven housing markets.
Urbanation reported just 1,599 new condominium apartment sales last year, a 60% drop from 2024 and 95% below 2021 levels.
The slowdown coincided with a record wave of project cancellations. A total of 28 active projects, representing 7,243 units, were scrapped in 2025, more than double the number of cancelled units in 2024 and above the previous peak in 2018.
“As the condo market enters the fifth year of its largest ever correction, the duration of this downturn should be a significant cause for concern as it relates to future supply,” Urbanation president Shaun Hildebrand said.
“By the end of the decade, we know with certainty that there won’t be any new condo completions. What we don’t know is how far into the 2030s the supply crunch will last. If rental construction can’t fill the void, this raises serious questions around the impact on affordability.”
Price correction and investors on the sidelines
Average selling prices in new launches slipped to $1,123 per square foot, an 8% decline from 2024 and an 18% drop from 2022, yet still well above comparable resale units at $856 per square foot in the fourth quarter.
Higher borrowing costs and weaker rents turned pre‑construction condos into a tougher proposition. Many units became a toxic asset with investors no longer able to count on the same demand from renters and many owners bleeding cash because rental income has fallen while mortgage rates rose.
“The rates, at this point, still don’t make sense when you add in the monthly mortgage payment or property tax and throw in the maintenance fees. It’s just not an attractive product,” DLC Clear Trust broker Micky Khaneka told Canadian Mortgage Professional last year.
Shift to completed units, looming supply shock
With investors pulling back, buyers gravitated to projects at occupancy and registration. Urbanation said a record 33% of new condo sales occurred in those stages, up from 9% in 2024 and 2% in 2023, while pre‑construction projects fell below half of total sales for the first time.
Completions remained elevated at 29,291 units in 2025, about 50% above the 10‑year average, even as unsold finished inventory climbed to 3,897 units, more than double a year earlier.
Urbanation also found roughly 10% of pre‑sold condos registered in 2025 were taken back by developers after buyers failed to close, or about 3,000 units.
However, new construction appeared to be stalling. Condo starts fell 63% year over year to 3,272 units and have plunged 88% over three years, pushing total inventory under construction to a 10‑year low of 50,479 units.
Urbanation projects completions would drop 25% in 2026 and again in 2027, and suggested that by 2029 no new condos are expected to be delivered.
Rental boom, policy questions and what comes next
Some cancelled projects shifted to rental: eight developments totaling 2,189 units converted to purpose‑built rentals in 2025, after 1,434 units made the same move the year before.
Purpose‑built rental starts grew 24% to 8,545 units, a multi‑decade high, but analysts warned that may not fully replace lost condo supply.
According to the Housing Supply Report from Canada Mortgage and Housing Corporation (CMHC), a surge in rental construction in the first half of 2025 in cities such as Halifax and Ottawa was not enough to counter a steep drop in condominium construction, especially in Toronto, Vancouver, and Montreal.
Kevin Hughes, CMHC’s deputy chief economist, framed the policy challenge starkly: “I think the challenge here is to have incentives for the private sector to get more involved in rental apartment construction but that those incentives are not [hindering] demand, because that’s the equation that is so difficult to balance right now.”
CMP
No comments:
Post a Comment