After years of price increases, new home sales in Toronto fell last year to their lowest level in almost two decades and the supply of unsold condos piled up, according to two new reports released on Friday.
New home sales sank to 25,161, according to the Building Industry and Land Development Association (BILD), which used data from Altus Group Ltd. That is the lowest annual number since Altus started tracking the figures in 2000.
Single-family homes showed the biggest drop, plunging by 50% from 2017 to 3,831 – 74% below the 10-year average. Condo sales dipped 38% to 21,330, 4% below the 10-year average.
Figures from condo research firm Urbanation show further weakness in condos as well. A record 21,991 units are expected to be completed this year, up by 29% from last year. While 98% of those units are pre-sold, more than half were bought by investors who will either sell or rent their units.
The number of unsold units in development jumped by 47% in the fourth quarter of 2018 to a more than two-year high, and price gains for units under development grew by only 0.4% between the third and fourth quarters, the smallest quarterly increase in almost three years.
“The slowdown in activity last year can partly be attributed to less demand from investors, who typically represent the largest component of new condominium purchasers,” Urbanation’s report said.
“The market is out of balance,” BILD President and CEO David Wilkes told Bloomberg. “We join other industry groups in calling on the federal government to revisit the stress test and allow a longer amortization period for first-time buyers. And we look forward to working with our municipal partners on removing barriers to development such as excessive red tape and outdated bylaws.”