Signs of the broader real estate slowdown has spread to the preconstruction market
Toronto developers are expected to delay the launch of 10,000 condo units this year, as preconstruction condo sales plunge amid higher borrowing costs.
But after a tumultuous five months where the Bank of Canada raised interest rates to 2.5 per cent from 0.25 per cent in an effort to rein in inflation, developers have scaled back plans. “The expectation of future rate increases and their impact on prices has a profound effect on presale buyer confidence,” Urbanation said in a report.
Urbanation estimates that, in the second half of this year, buyers of newly completed condos trying to recoup their expenses through rental income will face an average monthly shortfall of $1.06 per square foot, or the equivalent of nearly $700 per month on a 650-square-foot unit. By 2026, Urbanation predicts, that shortfall, or negative cash flow, will amount to $1.87 per square foot.
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