Summer saw multifamily deals sag across the Greater Toronto Area, as Colliers Canada reports just eight transactions in the third quarter of 2023. The total sales value squeaked slightly above $91 million, down more than 85 per cent from the $627.3 million worth of trades recorded in Q3 2022.

The eight transactions encompassed 373 suites, equating to an average price of $244,234. Meanwhile, Colliers analysts peg the average price per suite at $324,192 over the first nine months of the year, representing a 9 per cent slip from the comparable period in 2022. Over the past 12 months, just four multifamily deals have exceeded $50 million versus more than 20 such trades between Q4 2021 and Q3 2022.

Rising financing costs are fingered as the cause of the slowdown. The Bank of Canada’s key interest rate, at 5 per cent, is at its highest mark since 2001, while the CMB 5-year, which is the benchmark for Canada Mortgage and Housing Corporation (CMHC) financing, has risen 90 basis points, to 4.49 per cent, over the past year. Colliers analysts conclude this has “curtailed the leverage buyers had grown accustomed to in recent years”. Thus far in 2023, the average multifamily cap rate sits at 3.75 per cent, up 60 basis points year-over-year.

The largest transactions for the quarter occurred outside the city of Toronto’s boundaries, as Forum Asset Management acquired a 185-unit building in Oshawa and the Regional Municipality of Halton acquired a 70-unit complex in Oakville. Together, the two deals account for 60 per cent of total sales value and 68 per cent of total suites traded.