Toronto home sales plummet after foreign buyers’ tax

Home sales in the Greater Toronto Area plummeted by 20.3 per cent last month compared to a year ago, Canada’s largest real estate board said Monday, a sign that recent efforts to stabilize the city’s searing housing market are having an effect.

The average selling price for all properties in May was $863,910, up from $752,100 the same month last year, the Toronto Real Estate Board said. But that was down from $919,614 in April, the first month-over-month drop this year.

The data captures a month during which the Ontario government implemented a 15 per cent tax on foreign buyers in the Greater Golden Horseshoe, a fast-growing area stretching from the Niagara Region to Peterborough, Ont., retroactive to April 21.

The measures are intended to temper rapid price growth that has given rise to concerns that Toronto has become increasingly unaffordable.

They are also aimed at preventing or mitigating the damage that could result from a housing correction if one were to occur.

The board said in a statement Monday that the effects of Ontario’s housing changes have yet to be seen, but analysts said the data suggests otherwise so far.

“There’s little doubt the government measures to cool the housing market have had an impact, as foreign buyers have likely pulled back, while domestic buyers appear to have stepped back as well to see how the changes shake out,” BMO Capital Markets said in a note to clients.

Benjamin Tal of CIBC Capital Markets said while the “trajectory is exactly what the region needs,” the trend could be short-lived.