Toronto house prices soar again
23 per cent spike in August in wake of B.C. tax
TORONTO • Toronto housing prices soared again in August and while doubts remain about the presence of foreign buyers in the country’s largest housing market, realtors are pushing ahead to study the issue.
The Toronto Real Estate Board said Wednesday it will be releasing “thirdparty research” in the coming months as it looks at supply issues in the metro area — a move that comes as August results show a 23.5 per cent increase in sales in the GTA from a year ago and prices up 23.3 per cent for suburban detached homes.
“One of the things we are going to ask ( realtors) is to recall the sales they have been involved in over the last year and how many involved foreign buyers,” said Jason Mercer, director of market analysis with TREB. “The hope is we will have a better picture as we move towards the end of 2016.”
The announcement comes as British Columbia imposed a 15 per cent additional land property transfer tax on foreign buyers in Metro Vancouver effective Aug. 2 – a move some have connected with a 26 per cent year- over- year decline in sales in the city last month.
Some industry watchers have suggested foreign buyers may end up moving their money to other jurisdictions like Toronto to avoid the tax, but Mercer said it’s too early to say whether the increase in August sales is in anyway connected to foreign investors.
Toronto realtors do say the boost in August sales was partly due to two ext ra working days in t he month compared to a year ago. There were 9,813 sales through the Multiple Listing Service last month but TREB said without the two extra working days, sales would have only climbed about 13 per cent.
“The conditions underlying strong demand for ownership housing remained in place, including a relatively strong regional economy, growth in average earnings and low borrowing costs. Unfortunately, we did not see any relief on the listings front, with the number of new listings down compared to last year. This situation continued to underpin very strong home price growth, irrespective of home type or area,” said TREB president Larry Cerqua.
The Ontario government has said it is monitoring the B.C. situation and Mercer says the “concern is (government) will look at one side of price equation” and not look at boosting the supply of homes in the GTA through provincial land use policies.
Phil Soper, chief executive of Royal LePage Real Estate Services, still questions the impact on foreign investors in the marketplace.
“I believe, and this is a broad- based statement, but foreign investors as pure based i nvestors are considerably overstated,” said Soper, adding that the new immigrants driving housing demand in the suburbs are buyers who are settling in the Toronto area.
TREB’s numbers show the suburbs, or what is known as the 905 region of the Greater Toronto Area, are even hotter than the city proper.
Detached home s al es climbed 24 per cent in the suburbs from a year earlier to an average price of $ 905,610. Semi- detached and town house prices climbed 20.6 per cent and 18.4 per cent, respectively.
Benjamin Tal, deputy chief economist with CIBC World Markets, says prices in the city have created what he calls “Toronto refugees” who head further afield looking for better pricing only to end up driving up prices.
TREB said average sale price for all home types across the GTA rose 17.7 per cent from a year ago to $710,410. But in the city of Toronto, the average detached home sold for $1,206,637, still 33 per cent more than the average detached home in the 905 region.
“Those people have left Toronto because of affordability, but the gap is closing,” said Tal. “There is still a Toronto premium that exists.”