Condo apartment sales decreased by 28% on an annual basis last year to 18,247—a seven-year low, according to an Urbanation report.

The COVID-19 pandemic created reticence on the behalves of developers, who either delayed projects or cancelled them altogether—there were only six launches in the second quarter, and 27 in each of the next two quarters, compared with 31 in Q4-2019. There were 17,996 units launched in 2020, declining from 25,296 in 2019.

There were 4,642 sales in Q4-2020, which declined substantially by 43% from the same quarter in 2019 and were 22% below the 10-year average for the quarter, but the absorption rate rose by 2% to 87%. Unsold inventory also declined by 3% last quarter compared to Q4-2019, with the mean price increasing by 5% to $1,126 psf and setting a record.

The resale market was infused with supply during Q4, but with listings surging by 56% during the quarter, annual price appreciation was reduced to 3.4%. By the conclusion of the year, there were more than 80,000 condo units being constructed in the Greater Toronto Area, which Urbanation noted has never happened before.

“The divergence in new condo market activity between the City of Toronto and its suburbs was consistent with broader market trends witnessed last year across the resale condo market, low-rise housing market, and the rental market,” said the Urbanation report. “More buyers began to shift away from smaller living spaces associated with central living as working from home became the norm, taking advantage of record-low borrowing costs to move up to larger properties. This resulted in a market distortion, whereby 905 regions detached resale housing prices increased at a 23% annual pace while 416 condo prices declined 4.6% year-over-year in December.”

Urbanation’s report says the GTA’s resale market performed strongly last year, considering there was a pandemic and that Canadians spent the spring and winter in lockdowns, marking a sixth consecutive year in which over 20,000 sales were recorded. During H2-2020, resale activity grew by 12%, which is the second strongest showing for the back half of the year after 2016.

“Remarkably, the GTA resale condo market was able to produce nearly 9% growth in average prices in 2020 as price inflation rose into the double digits throughout the first half of the year,” said the report. “The consistent historical growth in resale prices, averaging 7.8% over the last 15 years, will provide new condominium buyers with continued confidence in 2021, especially since the pandemic wasn’t able to change the narrative as record amounts of government fiscal and monetary stimulus flooded the market. It was telling that in the face of condo rents falling by an unprecedented 13% (annually) in Q4-2020, annual resale price growth remained positive at 3.4% for the final months of the year.”

However, Urbanation warns that high levels of supply will offset condominium resale prices. In fact, the 3,232 active listings were the highest ever year-end number on record and were 174% above the number of listings in Q4-2019.

“However, as sales ramped up, the market slowly moved back into balance in the former City of Toronto, which saw inventory fall from 5.2 months of supply in Q3 to 2.5 months in Q4, while the outer 416 and 905 returned to sellers’ markets with under two months of supply,” said the report. “Anecdotally, the quick turnaround in the former City of Toronto has been driven by renewed optimism amongst investors looking to take advantage of price discounts that have occurred since the pandemic. However, the sustainability of this momentum in an environment of weak rents is questionable.”