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Toronto Housing Market Correcting, But Condo Prices Take Off

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Toronto Housing Market Correcting, But Condo Prices Take Off

Key takeaways:

  • Despite 35% decrease in sales, GTA market correcting – not crashing
  • Condo market sees hottest price gains at 21% Y-o-Y
  • GTA starts feeling effects of foreign buyer tax

Although the massive slump in sales activity in Toronto’s housing market had many worried about a housing crash, recent numbers released by the Toronto Real Estate Board (TREB) suggest the market is simply adjusting to new market conditions, especially in the wake of the provincial government’s Fair Housing Plan. While sales activity is down by nearly 35%, the average sale price climbed 3% year-over-year, despite non-resident purchases slumping in the wake of Ontario’s new non-resident speculation tax.

Despite 35% decrease in sales, GTA market correcting – not crashing

Although the Greater Toronto Area saw home sales activity decrease a whopping 34.8% over August 2016, market conditions in the GTA are far from dire. Significantly influenced by the provincial government’s Fair Housing Plan launched in April this year, decreasing sales have been affected by a significant number of buyers taking a step back to observe market trends in the wake of the 16-point plan.

While only 6,357 homes sold in August, new listings slid 6.7% year-over-year as well, reaching a total of 11,523 new properties on the market. As such, the GTA’s market presents balanced conditions and “if current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation,” predicts TREB Director of Market Analysis Jason Mercer. This, however, is dependent on whether buyers who are currently just observing the market will reenter en-masse, especially if it pairs with current negative supply trends. After all, year-over-year price appreciation inched up 3%, despite slumping sales activity, reaching an average of $732,292 in the Greater Toronto Area.

Condo market sees hottest price gains at 21% Y-o-Y

While sales activity declined by double digits across all home categories, single-family detached homes took the greatest hit, with sales down a jaw-dropping 41.6% compared to the year-ago figure, resulting in a meager 0.3% price appreciation. However, shifting buyer preferences resulted in noticeable price growth across other types of homes. In fact, semi-detached homes and condo apartments experienced double-digit price appreciation – 12.1% and an impressive 21.4% increase year-over-year.

Not only did apartments for sale register the most impressive price gains in the GTA, condos also took up an increasing share of the market, accounting for 28.8% of all residential sales, per TREB data.

GTA starts feeling effects of foreign buyer tax

Overall, the City of Toronto experienced a less dramatic sales slump than the rest of the GTA. While Toronto saw sales activity decrease by roughly a third, sales activity in the 905 was almost slashed in half compared to August 2016 trends. Supply, however, decreased at a more dramatic rate in the City versus surrounding areas.

But the slump in foreign buyer activity has made its mark on the entirety of the Greater Toronto Area. According to new data from the Ontario Ministry of Housing, the non-resident speculation tax (NSRT) has brought the share of non-citizen purchases down from 4.7% to 3.4% in the Greater Golden Horseshoe Region. In Toronto and surrounding regions, that number dropped from 7.2% to 5.6%. The effects of the foreign buyer tax will continue to be felt more strongly in the GTA than in the province overall, as non-residents accounted for only 2.6% of all Ontario sales.

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