The market for pre-construction condos in Toronto, once a boon for first-time homeowners (as well as investors looking to flip a quick profit), is in a massive downturn as high interest rates and a shaky economy continue to sideline many prospective buyers.

A new report from Urbanation shows just how much the drastic slowdown in sales is affecting new construction, with a total of 40 buildings slated to debut this year now shelved — buildings that would have brought a whopping 13,721 new units to the GTA.

"Elevated interest rates and heightened market uncertainty continued to grip the new condominium sector in the GTA," the firm writes.

Canada's sky-high interest rates hammering new home construction https://t.co/WdsPiplt4l #Canada #RealEstate

— blogTO (@blogTO) September 2, 2023

"While some new launches with competitive price points have seen success, many projects have been unable to make an economic case for proceeding in the current market, causing more supply to be put on hold."

The number of units that did end up introduced to the market this past quarter is down 23 per cent as a result, with year-to-date launches also significantly diminished, by 36 per cent.

Meanwhile, there have been 47 per cent fewer new condos sold so far this year compared to the same period last year, which may be why so few projects are even breaking ground — construction starts for complexes fell a staggering 72 per cent from the second quarter of this year to the third, and an even worse 86 per cent from Q3 2022.

This is all as all levels of government push for as much new housing as fast as possible to keep up with still-untenable demand, and the steeply accelerating rental prices that are coming with it.

450 sqft in sky with a price tag of 1 million 🤣. No need to be concerned.

— DeConditioned (@DConditioned) October 9, 2023

Many investors — who own the majority of new condos in the city — are understandably hesitant to buy and/or are being pushed to sell due to untenable lending rates paired with existing factors like the vacant home tax, foreign buyer ban and general cost of living crisis.

Some are even bailing on pre-construction projects and leaving hefty deposits behind, unable to close due to market prices and mortgage conditions, which is leaving builders without the confidence (or capital) to proceed with ongoing housing projects.