Canada has seen its biggest monthly drop in home sales in about 5 years, as it registered a 6 per cent decline in home sales during the month of May, compared to the previous month, even though the prices are still higher than they were last year.
The huge decline in Toronto was mainly responsible for the 6.2 per cent drop in home sales registered last month by Canada, as the number of homes sold in Toronto fell by more than a quarter, the Canadian Real Estate Association said on Thursday.
May usually registers an important number of home sales as buyers take to the outdoors after the winter.
The month-over-month decline occurred following the announcement made by Ontario concerning new regulations aimed at cooling the housing market. A 15 per cent non-resident buyer’s tax is among the measures that were implemented.
“Recent changes to housing policy in Ontario have quickly caused sales and listings to become more balanced in the GTA,” CREA president Andrew Peck said.
Though BMO economist Sal Guatieri said the sales decline in Ontario is likely to be just a minor deviation that may not continue after the new regulations are fully sorted out by the market.
“This merely returned sales to some semblance of normalcy after a manic winter,” he said. “The Ontario government’s policies have temporarily returned the Toronto and Greater Golden Horseshoe housing situation from a raging seller’s market to a more balanced playing field — for now.”
At the same time, home prices continue to increase on an annual basis, even though they were lower in May than they were in April.
The median cost of a house in Canada sold on the Multiple Listing Service (MLS) was $530,304 in May, a 4.3 per cent increase compared to the previous year, but down more than 5 per cent on seasonally adjusted basis from April’s level.