Toronto real estate expected to even out
Realtor predicts ‘more of a steady line’ in housing prices this year, in contrast to last year’s hot and cool periods
The drama is over but so is Toronto’s real estate correction, says Engel & Volkers realtor Anita Springate-Renaud.
That means that last year’s dramatic price hikes likely won’t be repeated, but neither will the difficult second half of 2017, which she said was largely spent cleaning up deals that wouldn’t close after the market dropped following the announcement of Ontario’s Fair Housing Plan in April, which includes a foreign buyers’ tax.
Luxury property purveyor Engel & Volkers anticipates that the Toronto market will continue to grow because of strong demand from a booming population and a limited supply of housing.
But that appetite isn’t coming from offshore buyers, says the company’s yearend market report.
Eighty-five per cent of home purchases in Vancouver’s three luxury neighbourhoods involved offshore, mainly Chinese buyers.
But in Toronto, only 15 per cent of purchases in the city’s top-end neighbourhoods — the Bridle Path, Forest Hill and Rosedale — involved foreign purchasers.
Foreign buyers were never the source of the fevered real estate activity in the Toronto region, said Springate-Renaud, broker of record at the Toronto Centre Engel & Volkers office.
Simple supply and demand were to blame for a situation that built over time, she said.
You had anti-sprawl legislation that slowed development outside of Toronto proper. Then you had the secondary (Toronto) land-transfer tax, which pushed people out to Richmond Hill, Aurora, where they could avoid paying it,” she said.
“The first half (of 2017) was crazy and the second half was trying to pull deals back together that blew apart that didn’t close the first half of the year. I think the lawyers were the busiest people over the summer,” she said, referring to high-priced purchase agreements that didn’t close after the market fell.
Springate-Renaud would not make specific predictions for 2018. It is too soon to assess the impact of new mortgage rules by the Office of the Superintendent of Financial Institutions launched on Jan. 1. Bank of Canada interest rate hikes could also have an impact, she said.
“I think it will probably be more of a steady line. There might be a slight increase,” she said.
The report says Toronto will owe its continuing strength in part to the city’s booming tech sector. But the highest per-square-foot sale prices in the increasingly hot condo market last year were in Vancouver and Montreal.
A condo in Rosedale sold for $1,300 per square foot, compared to $1,800 in Vancouver and $1,440 in Montreal, Springate-Renaud said.
The heavy construction at Yonge St. and Eglinton Ave., is positioning that area for price growth with the coming Crosstown LRT set to open in 2021.
Another luxury real estate company, Sotheby’s International Realty Canada, has also predicted a strong but relatively flat year ahead after 2017’s frenzy.
While luxury properties — particularly condos in the $4 million-plus category — fared well last year, sales were far slower in the second half.