Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A home for sale on Castle Frank Rd. in the Rosedale neighbourhood in Toronto on June 21 2012.

Fred Lum/The Globe and Mail

Condo sales in Toronto's downtown core took a large dip in June, a sign that efforts by government, regulators and the central bank to cool the market are causing buyers to be more cautious.

The condominium market in Canada's most populous city has been singled out by policy makers in Ottawa as one of the most worrisome spots in the country's economic landscape, with Finance Minister Jim Flaherty fearing that young buyers might overpay just before the boom ends.

The latest figures, released Thursday by the Toronto Real Estate Board, suggest that downtown condo sales fell 18 per cent in June from a year ago, to 1,415. By comparison, they rose 5 per cent in May to 1,632. While there had been a decline in March of 2 per cent, that pales next to June's decrease.

Story continues below advertisement

A decline in sales and the appreciation of prices – which rose 4 per cent in May – is welcome news to policy makers and the central bank, which has also warned about the effects an ultra-low interest rate has had on the behaviour of both lenders and buyers.

But these figures don't entirely capture all of the new condo construction under way, "and that's where a lot of the concern lies," said Craig Alexander, chief economist at the Toronto-Dominion Bank.

Prices held up despite the softer sales, rising 2 per cent from a year ago to $364,597 on average.

The figures represent sales that occurred through the MLS system, and predominantly capture sales of existing condos, as opposed to units still under construction. Sales of preconstruction units are down sharply, compared to last year's record levels.

More units are being built in Toronto than any other city in North America. The fear is that when they come on the market the demand will not be there, and that will result in a significant drop in prices.

"I think over the long term, condo development needs to happen and the condo market in the GTA will do well, but after the strong run that we've had and with the supply challenges that are coming, I do think we could see a close to 15-per-cent decline in prices over the next two to three years," said Mr. Alexander.

RealNet Canada Inc. will release June preconstruction sales figures next week, but sales in the first five months of this year are 22 per cent below last year's levels in that market, and May's figure was 37 per cent lower than a year earlier.

Story continues below advertisement

While the decline is significant, a large number of investors and Torontonians have still been scooping up yet-to-be-built units.

RealNet president George Carras notes that sales so far this year are still the second highest level on record, topped only by 2011.

Brokers and agents said Thursday that they've noticed much more of a decline in demand for preconstruction units than for average resales.

"I see investors cooling off at the higher price per square foot and some of the preconstruction stuff," said Jeff Johnston, a Toronto area agent with Re/Max Condos Plus.

He added that the new mortgage insurance rules that the federal government announced late last month will have an impact on preconstruction sales, because the rules will likely apply to buyers who bought a unit in a building that won't be built before next year, and who need mortgage insurance.

(Buildings often take four to five years to finish. If the buyer did not apply for mortgage insurance by June 21, and doesn't sign final mortgage documents by the end of the year, the new rules apply. Mortgages for preconstruction units aren't typically finalized until the building is done.)

Story continues below advertisement

"Builders are starting to feel it," said Oliver Baumeister von Bretten, a broker with Re/Max 2000 Realty Inc.

"They're offering incentives to the clients, as well as larger incentives to the realtors to bring clients to the front door."

This week, one of his clients who had bought a preconstruction condo last fall as an investment, and has already put 20 per cent down, said he wants to sell his contract to somebody else.

The investor lived through the real estate crash of 1989 and 1990 and has become concerned.

When Finance Minister Jim Flaherty announced the new mortgage insurance rules last month, he signalled that he's still concerned.

"We're seeing an acceleration of prices in Toronto," Mr. Flaherty said at the time.

Story continues below advertisement

"We have not seen a significant moderation of the market in Toronto, and it's important."

Sales of all types of homes fell in the Greater Toronto Area in June for the first time this year.

Sales were down 5.4 per cent from a year earlier, with downtown sales dropping while those in the surrounding areas held steady – a phenomenon that the real estate board attributes to the City of Toronto's land transfer tax.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies