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Toronto Slump Felt Nationally as CREA Downgrades 2018 Outlook

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Toronto Slump Felt Nationally as CREA Downgrades 2018 Outlook

Key takeaways:

  • Greater Toronto Area and national prices – push or pull?
  • GTA slows down, Canada follows
  • Toronto’s outlook and the national perspective
  • Varying conditions in a fragmented market

Home to over 20% of Canadians, recent changes in the Greater Toronto Area housing market are having a nationwide effect, especially as it follows Vancouver’s earlier housing market cool-down measures. As one of the greatest economic engines and one of the most expensive housing markets in the country, the GTA’s slumping sales, especially in higher-priced housing categories such as detached single-family homes and luxury homes, national averages and outlooks are already showing a slowdown in price growth, with further negative trends expected to bleed over into 2018.

Greater Toronto Area and national prices – push or pull ?

According to the latest data released by The Canadian Real Estate Association (CREA), the non-seasonally adjusted average home price nationwide stood at $472,247. That number, however, is heavily influenced by the pricey housing markets of the GTA and Greater Vancouver. Excluding the two economic powerhouses would bring the national average to $373,859, per the same source, considering the average home price in Toronto clocked in at $755,400 in August.

Although still up 14.25% from year-ago figures, price trends in the GTA have contracted 7.72% over the past 3 months, as the new governmental measures took hold in the market.

GTA slows down, Canada follows

As such, recent changes in Ontario’s housing policies brought on by the much-debated provincial Fair Housing Plan have cooled down national forecasts and market conditions as well. While the 14.3% month-over-month sales volume increase in the GTA pushed national sales activity up by 1.3%, the heavy contraction of the GTA housing sector played a major role in Canada’s 9.9% year-over-year negative sales volume growth.

The slump in new listings in the GTA and Greater Golden Horseshoe (GGH) Region also pulled national numbers down. As a result, new listings slid for the third consecutive month, with August contracting by 3.9%.

Toronto’s outlook and the national perspective

While the debate on where Toronto’s housing market is headed rages on among pundits, professionals and buyers, Toronto’s massive slowdown remains undeniable, with a rapid rebound highly unlikely to take effect over the coming months. CREA predicts that Toronto’s rapidly shifting market indicators will continue to bleed over into 2018 with a 0.6% price contraction compared to the current year.

The slide to a national average sale price of $503,500 is expected as a direct result of the high contraction experienced by Toronto’s high-end market, especially after the booming months of early 2017. In fact, Ontario’s shifting market conditions have already slowed the 2017 forecasted national average price to an expansion of 3.6%, markedly lower than initially predicted.

Varying conditions in a fragmented market

Due to Canada’s highly fragmented housing market and uneven population distribution, Ontario’s new provincial housing measures are forecast to contract 2018 prices by 1.1%, per CREA. In fact, 2017 national averages are already affected by Ontario’s lower-than-anticipated 8.7% average price appreciation. This is despite price gains experienced by Quebec, New Brunswick, Manitoba and Nova Scotia, and new annual sales records expected in Quebec and Manitoba by the end of the year.

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