Regulators play down systemic risks as oversupply and price drops hit Toronto and Vancouver condos
Condominium prices in Canada’s largest cities are falling sharply as inventories climb, creating risks for investors but potential opportunities for younger buyers.
According to the Toronto Star, Federal Housing Minister Gregor Robertson described the Toronto condo market as “now in free fall,” pointing to an oversupply of units in both Toronto and Vancouver.
He said this correction, long predicted, reflects an overbuilt market and noted developers are already converting some projects into rentals.
Robertson emphasized that the government will direct focus toward non-market housing such as subsidized and co-op units, while continuing programs to incentivize rental housing.
The Toronto Regional Real Estate Board reported average condo prices in the GTA dropped to $615,000 in July, the lowest in four years.
The Building Industry and Land Development Association (BILD) said July also marked the worst on record for new home sales in the region.
Overall, prices across all property types in the area have fallen more than 21 percent since February 2022, the Toronto Star reported.
The Financial Post reported that Peter Routledge, head of the Office of the Superintendent of Financial Institutions (OSFI), said he is not concerned about systemic stability despite the slowdown.
“Overall, capitalization of the banking system is sufficient to deal with challenges in commercial real estate and in newly built condominiums in Toronto (and) Vancouver that may not be moving as quickly as in the past,” he said at the Scotiabank Financials Summit in Toronto.
He noted OSFI’s safeguards — including capital buffers for banks and mortgage stress tests for borrowers — are designed to manage downturns.
Canada Mortgage and Housing Corp. (CMHC) reported in June that condo apartment sales between 2022 and 2025 declined by 75 percent in the GTA and 37 percent in Vancouver, while inventories more than doubled and prices fell.
An August 13 report by Altus Group also noted “an observable oversupply” in Toronto, with new completions putting “downward pressure on prices and rents for new units.”
The impact has been particularly acute for investors.
Statistics Canada data cited by Global News showed that in 2022, 38.9 percent of Toronto condos and 34.2 percent of Vancouver condos were investment properties.
A Leger survey for Rates.ca found 30 percent of Canadians said condos were once a good investment but no longer hold the same appeal, while 57 percent said they would not purchase a condo for any reason.
Urbanation reported in July that inventory in the Greater Toronto and Hamilton Area reached record highs after sales plunged 69 percent from a year earlier.
Mortgage expert Penelope Graham told Global News that units bought at the pandemic peak or pre-construction have already lost value. “Those units certainly have seen a loss in value, and we don’t know when or if they’ll recuperate that value,” she said.
For older Canadians, the downturn is reshaping retirement strategies.
“For many retirees, a condo once felt like a sure path to financial security. Today, the market is far less predictable,” said Ben McCabe, CEO of Bloom Finance, in Global News.
Certified financial planner Jason Evans added that investing in a condo can create a lack of diversification and ties up principal until a sale, making it less flexible than other options.
