Crisis deepens in GTHA's condo market: Continuing slump in sales causes more construction projects to be scrapped by developers
The Greater Toronto and Hamilton Area (GTHA) new condominium market is currently grappling with a significant downturn, as reported by real estate analysis firm Urbanation in their latest Q2-2025 report.
Urbanation President Shaun Hildebrand described the current state of the market as "a phase of the downturn that is really starting to wreak havoc." This downturn is primarily due to a combination of record-high unsold inventory, steep declines in sales, and reduced demand driven by rising interest rates.
The report indicates that the GTHA had more than five times higher inventory levels of new condominium apartments compared to two years ago. In Q2-2025, a total of 2,478 new condos were completed, representing a 102% annual increase and a significant oversupply in the market.
Sales figures are also at record lows, with only 502 new condo sales recorded in Q2-2025 – a 10% decline from Q1-2025 and a dramatic 69% drop compared to the previous year. This sales volume is 91% below the 10-year quarterly average, indicating exceptionally weak buyer interest in what is normally a peak sales period.
Rising interest rates are another key factor contributing to the downturn. The Bank of Canada raised interest rates 10 times between March 2022 and July 2023, significantly increasing carrying costs for investors and reducing overall demand. This has made condominium ownership less affordable and diminished investor enthusiasm.
Developers are also responding to the weak market conditions by slowing new project launches and cancelling projects. Only three new condo projects started presales this quarter, representing just under 900 units. The cancellations of proposed condominium projects will result in the loss of 4,412 housing units.
The eventual reduction in the completion of new condominium buildings "should help to alleviate some pressure" in the GTHA condo market, according to Hildebrand. However, Urbanation's data suggests that developers are holding off on new projects, indicating a cautious approach to the current market conditions.
In his analysis, Hildebrand stated that the near-term will remain very challenging for the new condo market. The median price of a GTHA condominium unit fell 5.6% year-over-year to $699,700, according to a Royal LePage report released earlier this week. The price per square foot of condos in the GTHA also saw a six per cent decline from last year and a 16 per cent drop from two years ago.
Despite these challenges, Hildebrand remains optimistic about the long-term prospects of the GTHA condo market. He believes that the market will eventually stabilise as supply adjusts to demand and interest rates normalise. Until then, buyers and developers alike should proceed with caution.
In light of the current market conditions, analysts are urging potential investors to exercise caution when considering investments in the Greater Toronto and Hamilton Area (GTHA) new condominium market. The significant downturn, as reported by Urbanation, is primarily attributed to record-high unsold inventory, steep declines in sales, reduced demand driven by rising interest rates, and an oversupply in the market.
Consequently, the finance sector is closely watching the housing-market, particularly the GTHA, as the record low sales figures and impending cancellations of proposed real-estate projects serve as indicators of an unstable market. It is expected that the eventual reduction in the completion of new condominium buildings will help alleviate some pressure in the market, but the near-term will remain challenging due to the ongoing downturn.
