- Average price rises 25% to C$920,791 after 33% jump in March
-
New listings jump 34% as Ontario imposes foreign buyer tax
Housing prices jumped 25 percent last month from a year earlier, down from the 33 percent annual increase in March. The average price of C$920,791 ($671,000) in April was just 0.5 percent higher than in March, according to figures from the Toronto Real Estate Board.
In further signs of a slowdown, sales fell 3.2 percent to 11,630 units, the first year over year decline since 2014. The number of new homes on the market jumped 34 percent to 21,630, the biggest increases since 2010, the figures released Wednesday show.
“If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions,” Jason Mercer, head of market analysis at the real estate board, said in a statement. “It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years.”
Mercer predicted that annual home price growth on a monthly basis will remain “well-above the rate of inflation as we move through the spring and summer months.”
The sales slowdown and jump in listings suggest the Ontario government’s moves to curb price gains may be having an effect. The government announced a 16-point housing plan on April 20, including a 15 percent tax on foreign home buyers and expanded rent controls. A similar tax in British Columbia slowed home price growth in Vancouver last year, although prices there rebounded 11 percent in April from a year earlier.
“It is too early to tell whether the increase in new listings was simply due to households reacting to the strong double-digit price growth reported over the past year or if some of the increase was also a reaction to the Ontario government’s recently announced” housing measures, said board President Larry Cerqua.
The month of May is typically one of the busiest of the year and should provide a better indicator of market direction following the Ontario moves, Mercer said.
The April housing numbers also cover about 10 days of the crisis at embattled mortgage lender Home Capital Group Inc. The Toronto-based company has seen its stock plunge and customers withdraw deposits after it was accused by Ontario’s securities regulator of misleading investors about fraudulent loans. Some economists have said the turmoil may cool the market if it spreads to other mortgage lenders, making it harder for some home buyers to borrow.
Home Capital’s funding woes aren’t “the beginning of the end,” of the housing boom nor does this represent the “ultimate test” for the market, said Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce.
“The ultimate test will be high interest rates,” he said at a real estate conference in Toronto Wednesday. “The ultimate test will be a recession, and that will come eventually. Home Capital is not the ultimate test.”
Home Capital represents a small segment of the so-called subprime market of borrowers who can’t get a mortgage at a traditional bank yet are still good credits, he added.
“Many of those sub primers, so-called sub-primers, they are a better risk than me because they are self-employed new immigrants with a lot of money that simply don’t fit into the regulation framework so they go elsewhere and are actually doing fine.”
The Toronto Real Estate Board weighed in Wednesday on the ongoing debate over the role non-Canadian investors are playing in the housing boom, as well as on the prevalence of speculation by foreign and domestic homebuyers and multiple home ownership in Toronto and broader Ontario.
The number on all counts “remains low,” the board said in a separate statement. Foreigners have accounted for about 2.3 percent of purchases in the Toronto and Niagara region over the past decade, the board said.
The board noted the Easter holiday may have affected the most recent sales data as it fell in April this year and in March in 2016.
Please share this
No comments:
Post a Comment