Recent polling data show that real estate price expectations have come down from record levels. This is a sign that Canadians are anticipating housing markets in places like Toronto which will finally cool. The number of people saying home prices will rise in the next six months fell for a second week to 46 percent, according to data compiled by Nanos Research Group for Bloomberg News. That’s down from 47.7 percent the previous week and below a record 50.1 percent two weeks ago.
While sentiment levels for real estate are still at historically high levels, the trend suggests confidence in the housing boom may be fraying amid troubles at Home Capital Group Inc. and the Ontario government’s introduction of new measures to cool speculation in Toronto’s housing market, including a foreign buyers tax.
“After hitting an eight year high on the perceptions of the future value of real estate in early May, perceptions are starting to normalize,” Nanos Research Group Chairman Nik Nanos said in a statement.
Policy makers including Finance Minister Bill Morneau and his Ontario counterpart Charles Sousa are seeking to bring about a smooth slowdown to Toronto home prices, which have been growing at a 30 percent annual rate. That comes at the same time as strains have emerged in the country’s housing finance system after a run on deposits at Toronto-based Home Capital.
New Listings Soar
There is data proof of a moderate slowdown in Toronto. Realtor figures for April released last week suggested transactions in Toronto are falling in response to Sousa’s 15 percent foreign buyer tax, while supply rose with a 36 percent jump in new listings to a record high.
Nanos Research asks Canadians for their views on personal finances, job security, the outlook for the economy and where real estate prices are headed. The responses are compiled into a gauge of consumer sentiment, the Bloomberg Nanos Canadian Confidence Index.
Overall, the index was little changed at 57.9 last week as improving perceptions of personal finances and job security offset worries about housing and a slight deterioration in the outlook for the economy.
The confidence index is based on telephone polling with a four-week rolling average of 1,000 respondents, and is considered accurate within 3.1 percentage points, 19 times out of 20.