The Greater Toronto Area’s housing market continued to cool during the second full month after Ontario unveiled its Fair Housing Plan, a major policy move including a much-publicized foreign-homebuyer tax for the Greater Golden Horseshoe.
Some 7,974 home sales were recorded via the Toronto Real Estate Board (TREB)’s listing system in June, plunging 37.3 per cent from the activity observed during the same month in 2016, the best year on record for GTA home sales.
But this June’s slowdown wasn’t primarily due to foreign buyers leaving the market, TREB suggests, as observers continue to debate their impact on home prices.
The board refers to recent provincial government data showing that from April 24th to May 26th, foreign homebuyers accounted for just 4.7 per cent of the 18,282 transactions recorded throughout the Greater Golden Horseshoe.
Pointing to that sliver of overall sales, TREB instead attributes the cooling to buyers sticking to the sidelines to see how the effects of the plan pan out as well as sellers rushing to list homes on a hunch that prices have peaked.
“The end result has been a better supplied market and a moderating annual pace of price growth,” writes Tim Syrianos, TREB’s president, in the board’s latest monthly news release of data.
As the number of new listings in June surged 15.9 per cent on a year-over-year basis, annual price growth moderated once again.
Until last month, the average selling price of a GTA home had been posting double-digit annual gains. But in June, the average sale price was $793,915, up 6.3 per cent compared to a year earlier.
“A better supplied market has certainly been a key factor influencing the moderation in price growth,” the TREB report reads. “However, the average selling price has also been impacted by the fact that the greatest home sales declines were for more expensive home types, most notably detached houses,” the news release continues.
Detached homes in the GTA sold for an average of $1,055,863 in June at an annual rate of increase of 7.8 per cent. In May, this segment saw prices surge 15.6 per cent annually.
June price growth was strongest in the more-affordable condo market, where condos averaged a selling price of $519,784, an increase of 23.2 per cent from a year ago.
Demand for condos has been insulated from the effects of the Ontario Housing Plan as these dwellings remain the final affordable option for many homebuyers in the Greater Golden Horseshoe, one economist recently noted.
All housing types posted month-over-month benchmark price declines this June with the exception of condo apartments, which saw prices up 1 per cent from May. Detached, attached and townhouses experienced monthly price drops of 1.3 per cent, 1.4 per cent and 0.04 per cent, respectively.
The Ontario Fair Housing Plan, which also included an expanded rent control mandate for virtually all rental units — not just those built before 1991 as was previously the case — and the possibility of higher interest rates have also led TREB to update its forecast.
A day after RBC downgraded its forecast for Ontario home sales, TREB has done the same for the GTA, the province’s most-active market.
The board now expects home sales to fall within the range of 89,000 and 100,000 this year, shy of the 2016 yearly record of 113,133.
At the same time, GTA home prices are expected to fall short of last year’s 17.3 per cent annual appreciation, as per TREB’s MLS index.
This year, TREB projects home prices in the GTA will rise between 13 and 18 per cent.
“While an annual rate of growth in this range will still be very strong from a historic perspective, it is important to note that it will also represent a moderation in year-over-year average price growth in the second half of the year,” the TREB news release adds.