Toronto-area housing prices, sales continue descent

Prices and sales continue to slide for existing homes in the Greater Toronto Area, but for now there doesn’t appear to be much chance government will ease off measures designed to cool off the market in Canada’s largest city.

On Thursday, the Toronto Real Estate Board reported the average price of a home in the GTA sold for $746,218. That’s up 4.6 per cent from a year ago. But at the peak of the market — at the end of April — that figure was $920,791, an almost 19 per cent decline.

TREB said there were 5,921 transactions in July, a 40.4 per cent decline on a year-overyear basis and part of downward trend that coincides with a decision by the Ontario government to introduce its Fair Housing Plan, a 16-point program to slow the market that included a 15-per-cent non-resident speculation tax

Though not directly aimed at the housing market, the Bank of Canada stuck another pin in the sector last month when it raised the overnight lending rate by 0.25 per cent. The moved was matched by banks who all increased their prime lending rate from 2.7 per cent to 2.95 per cent.

“I don’t think policy has been tightened too far and I don’t think actions are called for to stop the cool off,” said Craig Alexander, chief economist with the Conference Board of Canada. “The bulk of the market reaction is purely psychological. In the coming months, listings are likely to fall and the decline in sales will moderate. I suspect that the Bank of Canada will be pleased to see the cooling, and will monitor the risks of a sustained downturn. I don’t think they will hike again at next meeting, but another quarter percentage point increase should occur before the end of the year.”

The slide in Toronto prices does not show any sign of abating. The average price of a detached home in GTA is close to breaking through the psychological $1 million barrier. TREB said the average detached home in the GTA sold for $1,000,336 last month, a 4.9 per cent increase from a year ago and well below the $1,205,262 average in April.

TREB statistics show more moderately priced segments of the market like semi-detached homes and condominiums are performing better.