- What Multifamily sales activity remained well below the 10-year average in Q1
- Why More lower-priced transactions are taking place
- What next Continued economic and political uncertainty is shaking investor confidence
Greater Toronto Area multifamily sales activity in the first quarter of 2025 remained relatively unchanged from the year prior, Colliers said in a report out today.
Sales volume for the quarter continued to trend historically low, sitting roughly 50% below the 10-year average. Transaction volume reached $173.1m, up just 1.2% from Q1 of last year. Lankin Investments’ purchase of Brampton Village from Canadian Apartment Properties REIT accounted for $73.8m of that volume.
A total of 12 transactions took place during the quarter, up 33.3% annually. The number of suites traded also increased substantially, up 42.3% to 555. Lankin’s purchase accounted for almost half — 43% — of those units. This underscores “a trend toward more frequent sales of smaller, lower-valued properties,” Colliers said.
Similarly, the average price per suite dropped to $288,000 — a 21.5% annual decline.
The average capitalization rate, meanwhile, rose 24 basis points from Q4 2024 to 4.49%. This also marks a 71 bps increase over Q1 2024.
The depressed market activity continued despite an improvement in financing conditions. Rate cuts have begun to ease borrowing costs, Colliers said, with the five-year Canada Mortgage Bond rate having declined to 2.97% as of April 9. One year prior, it was just over 3.7%.
Some borrowers are having trouble securing five-year Canada Mortgage and Housing Corp. loans, but investor sentiment generally remains “cautiously optimistic,” the brokerage said, even amid shifting economic and political landscapes.
“The upcoming federal election has introduced short-term uncertainty, with housing, immigration, and domestic investment all central to the national agenda,” Colliers said.
“Proposed incentives to encourage reinvestment within Canada are gaining attention, as policymakers look to stimulate growth in housing, infrastructure, and natural resources. The eventual policy direction will influence both capital flows and overall confidence in the investment climate.”
The trade war with the U.S. has increased volatility in financial markets, heightening concerns about economic growth and shaking investor confidence. As a result, investors are taking a more measured approach to capital deployment, but the multifamily market is likely to hold some level of interest.
“Despite near-term uncertainty from trade tensions, monetary policy shifts and the upcoming election, the multifamily sector remains one of the most resilient and attractive risk-adjusted investments available,” Colliers said.
