Toronto Real Estate | Market Update | October 2018
The most recent housing data released by Toronto Real Estate Board (TREB) shows that the housing market of Toronto, Canada's biggest city, is becoming stable. The price gains revealed are a stark contrast to the sharp fall that was witnessed earlier in the year. The fall was a result of multiple government regulations that were brought into force to prevent rapid price rises. In particular, the foreign buyers tax had a chilling effect on Toronto real estate prices, especially on high cost houses. As TREB's October report shows, the market may not have returned to the 2016 highs, but it is on a steady rise. It is only a matter of time before housing prices return to their 2016 levels.
In year-over-year comparison, TREB's data shows that both the number of home sales and selling prices have risen from levels that they were in 2017 at the same time. However, the number of new listings has dropped. In September, 2018 6,455 homes were sold in Greater Toronto Area. This represents a 1.9% increase compared to sales recorded in September of 2017. The selling prices of the houses saw an even bigger rise. On average, a home sold for $796,786. This price represents a 2.9% increase compared to the average price of the same month in 2017. The number of new listings, however, saw a fall compared to September 2017. The 15,920 new listings recorded by TREB were a 3.1% drop from the number of listings recorded in the previous year. Many industry analysts believe that the drop in new listings is a result of tightening market conditions such as tougher requirements for mortgage qualification. This drop is certainly not good news for buyers because they will have more difficult time finding a home that effectively satisfies their needs.
TREB's data of month-on-month house sales and prices shows that there has been no significant change in the Toronto real estate market between August and September, 2018. While sales for September, 2018 rose by 0.2% compared to sales of the previous month, the average house prices saw a 0.5% drop from what it had been in August. These minor changes are further evidence that earlier volatilities may be coming to an end.
On the type of houses sold, cheaper higher density homes experienced higher annual price growth rate than the generally expensive low density homes. Condominium apartments led the pack in price rise. In September 2018, they went for an average of $506,300. This price represents 10.1% rise from September, 2017. As condominium apartments saw a remarkable price rise, detached houses saw a drop in their average prices. In September 2018, the benchmark price for a detached house was $914,200. Compared to September, 2017, this price represents a 1.6% fall.
What this data reveals is that government regulations aimed at reducing speculative buying may have only temporarily depressed home prices for relatively cheap houses. The effect of the regulations has been greater for more expensive detached houses. On average Greater Toronto's rising population means that, at least for the foreseeable future, housing demand in will remain higher than supply. Unless the government addresses housing supply problems, home prices are going to continue to rise.