TORONTO – Home sales in the area of Greater Toronto have Declined by 20.3 per cent because of the continuous increase in house prices, states the Toronto Real Estate Board. In addition to this, the board also goes further to state that the average selling price for all properties in Toronto for the month of May was $863,910 which indicates an increase of 14.9 per cent as compared to the same month from last year’s analysis. Detached homes, with an average selling price of $1,141,041, declined in sales by 26.3 per cent in the Greater Toronto Area.
Benjamin Tal, who is an economist at CIBC Capital Markets wrote that, “The trajectory is exactly what the region needs. A market that is falling due to the force of its own gravity to an external shock. The acceleration in activity and prices in 2016 and early 2017 did not pass the logic test. Today’s numbers suggest that sellers agree with that assessment and are starting to take profit.”
The data from the study takes into account a month in which the government of Ontario applied a 15 per cent tax on foreign consumers in the Greater Golden Horseshoe which is a rapidly growing region that extends from the Niagara Region to Peterborough, Ontario.
The measures are meant to reduce increased growth of prices that has led to concerns of Toronto becoming increasingly unaffordable. They are also meant to mitigate and prevent the cost that could be a consequence of a housing correction if that was to happen.
It was stated by the board on Monday that the effects of housing changes in Ontario are still to be noticed. However, the morning note by the Bank of Montreal says there is “little doubt” that there has been any impact by the government measures.
The bank says, “foreign buyers have likely pulled back, while domestic buyers appear to have stepped back as well to see how the changes shake out.”
The City’s housing market is being watched closely at various levels by policy-makers as growing fears that the fallout would have consequences on the national economy.
There are also signs that the Vancouver real estate market is heating up again after it was reported on Friday by the real estate board that home sales last month had rebounded to near record levels. Business in Metro Vancouver dropped by 8.5 per cent year-over-year in May, while the MLS benchmark price for properties reached $967,500, which indicates an increase of 8.8 per cent since May 2016. British Columbia last year in August introduced certain measures which include taxes on foreign buyers to try to stabilize the market.