Latest efforts to bring the real estate housing market under control are having the envisioned effect on the market as home sales in the GTA drop. The sales of home in the region waned by 20.3% in May and according to the Canadian Real Estate Board, this decline came as a result of efforts made to bring the real estate market under control.
Despite these changes, economists and real estate agents argue that the efforts made to cool the market such as the 15% tax on foreign investors, will most likely have short-term effects.
Speaking on the matter, Brian Elder, a sales representative with Royal LePage Real Estate Services noted that many investors and market spectators are waiting to see how the effects of the measures effected as they are unsure of what will happen next.
Elder went on to highlight that home sales in the GTA will most likely rise again. Sales figures for the month of May rose from $752,100 to $863,910 which is similar to the increase of the previous year. Yet still, it was a decline from the figure recorded in April at $919,614.
According to the Toronto Real Estate Board, this is the first month-over-month decline has been experienced this year.
Last year, home prices in the GTA rose by 42.9% which incited the government to take measures to cool the market. The increase in home prices occasioned a substantial drop in home sales, which down slided by 26.3% in the GTA last year as prices rose 15.6% to $1,141,041.
The statistics for the month of May mirrored the measures put in place by Ontario to control housing prices. Some of the measures taken by Ontario includes the 15% foreign buyers’ tax, rent controls and also the vacant home tax.
On Monday, the real estate board stated that they are yet to see the effects of the changes made by Ontario which were set to motion in April. Although for the time being, data proves something different.
BMO Capital Markets in a note to clients stated that there is very little argument that the efforts of the government are having effect on the market, as it can be clearly seen that local investors are once again taking over the real estate market.
Benjamin Tal of CIBC Capital Markets stated that the new changes to market might be for a short period of time even though the change is much needed by the people. Tal added that the current situation in Toronto is quite related to what took place in Vancouver last year.
Home prices in Vancouver for 2015 were very strong but went through a decline in 2016 and this drop was mainly as a result of doubts in foreign investments involvement in the market.
Following the introduction of the 15% tax on foreign buyers in August 2016, Vancouver has been recovering. Home sales increased by 22.8% in May as opposed to April stated the real estate board.
All attention is focused on the Toronto and Vancouver real estate markets, to watch out for any connected negative effects the changes will have on the national economy.
Currently buyers are taking a respite ton on how things unfold but Elder stated that they now have more options to choose from which will cut down on the bidding wars which was seen during the first few months of the year.