Weekly polling statistics show real estate price expectations have gone down from record levels, in a sign that Canadians are predicting housing markets will in the end cool in areas like Toronto. The share of people saying home prices will increase in the next six months fell for a second week to 46 %, according to statistics gathered by Nanos Research Group for Bloomberg News. That’s down from 47.7 % the previous week and below a record 50.1 % two weeks ago.
While the levels of sentiment for real estate remain at historically elevated levels, the trend suggests assurance in the housing boom may be fraying amid troubles at Home Capital Group Inc. and the government of Ontario’s introduction of new mechanisms to cool speculation in the housing market in Toronto, including a foreign purchaser’s tax.
Nik Nanos, Chairman, Nanos Research Group in a comment said “after reaching an eight year increase in the perceptions of the future value of real estate in early May, perceptions are beginning to normalize.”
Policy makers including Bill Morneau the Finance Minister and Charles Sousa his Ontario counterpart are seeking to bring about a smooth slowdown to Toronto home prices, which have been increasing at a 30 % annual rate. That has come at the same moment as strains have emerged in the country’s housing finance system after a run on deposits in the Home Capital based in Toronto.
There is already proof of a moderate slowdown in Toronto. Realtor statistics for the month of April published last week suggested transactions in Toronto are declining in response to Sousa’s 15% foreign buyer tax, while supply rose with a 36 % jump in new listings to a record high.
Almost every week, Nanos research ask Canadians for their opinions on private finances, job security, the outlook for the economy and where real estate prices are heading to. The responses are then published into a gauge of consumer sentiment which is the Bloomberg Nanos Canadian Confidence Index.