'Affordability continues to deteriorate': GTA condo sales hit 23-year low in July, building association says

Higher interest rates could stay well into 2024 Many mortgage borrowers at the end of their latest rate cycle might be in for a shock as they come up for renewal.

Sales of condominiums in the Greater Toronto Area (GTA) last month were the lowest they’ve been in July in 23 years, according to the Building Industry and Land Development Association (BILD).

The association says rising interest rates have left prospective buyers cautious, as a shortage of supply continues to negatively impact affordability across the market.

“Condominium apartments, including units in low, medium and high-rise buildings, stacked townhouses and loft units, accounted for 828 units sold in July, down 39 per cent from July 2022 and 50 per cent below the 10-year average,” BILD said in a Wednesday press release.

“It was the lowest number of condominium apartments sold in July in 23 years.”

BILD says that according to data obtained by the Altus Group, the GTA saw a total of 1,190 new home sales last month, which was down 18 per cent from July 2022 and 50 per cent below the 10-year average.

“GTA new home sales slumped in July,” said Edward Jegg, Research Manager at Altus Group in the press release. “The latest interest rate hikes have pushed many buyers to the sidelines again as affordability continues to deteriorate.”

Single-family home sales in July rebounded from last year, and were up a massive 281 per cent, but were still 51 per cent below the 10 year average, BILD says.

A report released by RE/MAX on Tuesday found that there was a burst of sales of detached homes in the second quarter of this year due to a dip in prices, but subsequent rate hikes a supply shortages pushed many prospective buyers back to the sidelines.

“Anxious homebuyers were quick to identify the bottom of the market and jumped in with both feet in the second quarter of the year,” said Christopher Alexander, President of RE/MAX Canada in a press release.

“The short burst of home-buying activity clearly underscored the resilience of the housing market, but the lack of inventory available for sale curtailed any real momentum from building.”

The report found that detached home prices in nearly every corner of the GTA were more affordable during the first half of this year compared to 2022. In Toronto, just four neighbourhoods saw an average value increase of detached homes, according to RE/MAX data.

BILD says that despite chronic supply shortages, new home inventory did grow slightly last month compared to June of this year, with 16,683 units available across the GTA.

“With slowing sales and rising inventory, benchmark prices softened,” the association said in the release.

“The benchmark price for new condominium apartments was $1,084,768, which was down 9 per cent over the last 12 months. The benchmark price for new single-family homes was $1,673,696, which was down 13.5 per cent over the last 12 months.”

BILD’s CEO and president, Dave Wilkes, says the federal government needs to do more to help kick-start the slumping market, adding that federal policies and institutions are in part responsible for the shortage of supply and the affordability crisis.

“The measures within the government’s scope that can help with affordability and new housing supply include deferring HST on purpose-built rentals, helping municipalities financially to deliver infrastructure that supports housing, and indexing the thresholds for the GST/HST new housing rebate,” Wilkes said in the press release.

“We call on the federal government to act with the urgency the situation demands.”