Major housing markets ‘too hot’
Modest measures have ‘no impact’
TORONTO The two strongest housing markets in the country, both targeted this year by new housing policy from Ottawa, continue to exhibit no sign of slowing down at all.
On Monday, the Real Estate Board of Greater Vancouver said March was its highest selling month on record.
Tuesday it was Toronto’s turn. Canada’s largest city showed it’s on pace to make 2016 a recordbreaking year for existing home sales as prices continue to punch through new highs.
More than $7.1 billion in resale housing activity was conducted in the Greater Toronto Area in March, as 10,326 homes changed hands — a 16.2 per cent increase from a year ago.
Coveted detached homes in the city of Toronto sold for on average $1.17 million, up 12.4 per cent from a year ago.
Toronto prices still remain no match for Vancouver, where the average price in March for a detached home in the region was $1.78 million.
Metro Vancouver set a record for sales in a month in March as the board’s index for all housing prices was up 23.2 per cent from a year ago.
“The interesting things to me in the Toronto data is how little impact the modest tightening measures by Ottawa have had on the hottest market, i.e. no impact. They must try harder,” Doug Porter, chief economist with the Bank of Montreal, said in an email.
“Toronto increasingly looks like a milder version of Vancouver. Now, some of strength may be due to relatively favourable weather, but the big picture is that these two markets quite simply remain too hot for comfort. I am increasingly concerned about the mounting anecdotal stories of speculative activity and the rampant bidding wars through much of the GTA (no longer just the city of Toronto).”
Ottawa created new mortgage rules that took effect Feb. 15, increasing the minimum down payment to 10 per cent from five per cent for the portion of a home valued over $500,000.
The move was generally seen as aimed at the Toronto and Vancouver markets where prices easily top $500,000.
Peter Norman, the chief economist with Altus Clayton, said Toronto will begin to slow down once some of the new suburban housing developments are approved.
“I think it will resolve itself in the next couple of years,” said Norman. “The pressure valve will come off. On the Vancouver side, there is strong demand and the development industry is struggling to bring forward new supply. It is a market that should stay pretty strong until we see the pendulum swing away from Vancouver in terms of economic growth.”
Toronto increasingly looks like a milder version of Vancouver.