Following the introduction of tax on foreign buyers by the Ontario government, sales of homes went down across Canada sharply during last month, caused by a plunge in the Greater Toronto Area. According to the Canadian Real Estate Association; compared to April, properties sold went down nationwide by 6.2 per cent in May, which was the largest month-to-month drop in about five years. Sales was noted by the industry to have gone down month-over-month in the GTA by 25.3 per cent.
Gregory Klump, chief economist of CREA said; “This is the first full month of results since changes to Ontario housing policy made in late April. They provide clear evidence that the changes have resulted in more balanced housing markets throughout the Greater Golden Horseshoe region. For housing markets in the region, May sales activity was down most in the GTA and Oakville. This suggests the changes have squelched speculative home purchases.”
A whole lot of measures were introduced, including a 15 per cent tax on foreign buyers that was intended to have the intense housing market stabilised in Toronto. Sal Guatieri said; “Given the strong economic, demographic and financial backdrop, don’t expect the GTA market to stay down for the count. Policy tinkering will do little to cool demand on a sustained basis. Time to take out the heavy artillery: higher interest rates. The ball is now firmly in the Bank of Canada’s court.”
While the rules has had an impact, it hardly brought back “some semblance of normalcy after a manic winter” that won’t last long.
Central bank of Canada mentioned that the low interest rates may be over soon.
Governor Stephen Poloz said the cuts on the average rate has been affective as the economy builds momentum. Sales increase over the month by 22.8 per cent, the city is worried a bubble may happen in less than a year after a tax on foreign buyers is introduced in the Vancouver area by the British Columbia government.
The average price for homes sold in May was $530,304 in the whole of Canada driven by $863,910 and $1,110,376 in Toronto and Vancouver respectively.