Toronto condo sales were down nearly 20 per cent in second quarter as inventory levels continued to rise: TRREB

Toronto condo sales were down nearly 20 per cent during the second quarter of the year as elevated interest rates continued to weigh on the market.

New data released by the Toronto Regional Real Estate Board (TRREB) shows that just 5,474 condos changed hands in April, May and June, compared to 6,824 during the same time period last year.

The data comes just one week after real estate research firm Urbanation released a report showing that new condo sales plummeted to a 27-year low in the first half of the year amid a “sharp downturn in construction starts.”

“The condo market is very sensitive to interest rates, given that this segment is a traditional entry point into homeownership. With monthly payments remaining high and average rents edging lower over the past year, many would-be buyers remain on the sidelines,” TRREB President Jennifer Pearce said in a news release accompanying the data. “However, over the next year, an improving affordability picture will see a growing number of first-time buyers enter the condo market.”

The Bank of Canada raised interest rates on 10 separate occasions between March, 2022 and July, 2023, bringing its key overnight lending rate from a historic low of 0.25 per cent all the way to five per cent.

It has now cut rates at two consecutive meetings and has suggested that further reductions are forthcoming so long as inflation continues to slow.

However, the real estate market has remained constrained.

In its report, TRREB noted that GTA condo listings surged by 36.5 per cent in the second quarter, resulting in “elevated” inventory levels.

But selling prices remained sticky. The TRREB data shows that the average condo sold for $729,005 in the second quarter, down just 1.2 per cent from the same time period in 2023.

“Despite a much better supplied condo market over the past year, selling prices have remained relatively flat, especially in Toronto,” TRREB Chief Market Analyst Jason Mercer said in a release. “This suggests that sellers are holding relatively firm on their listing prices. This may be in anticipation of improved market conditions as borrowing costs continue to trend lower this year and next.”

In June the average selling price of a home in the Greater Toronto Area across all property types was $1,162,167. That is down from a peak of $1,334,062 in February 2022, which was the prior to the Bank of Canada beginning its interest rate hiking cycle.