Toronto’s housing markets continued to chill in February following a slow start to 2018, a new report shows.
The number of sales in Toronto and its surrounding areas fell 34.9% year-over-year to 5,175 in February, while the average sales price dropped to C$767,818 (US$595,051), a 12.4% decline from the same period in 2017, according to a monthly report released Tuesday by The Toronto Real Estate Board.
The deep annual decline is partly a result of February 2017’s record-breaking sales and prices, however, a major contributing factor to the change might be the government’s cooling measures introduced last year and at the beginning of 2018, according to Tim Syrianos, the board’s president.
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"Prospective home buyers are still coming to terms with the psychological impact of the Fair Housing Plan, and some have also had to re-evaluate their plans" in face of generally higher borrowing costs incurred due to new mortgage stress test guidelines by the Office of the Superintendent of Financial Institutions, Mr. Syrianos said in the report.
To rein in an overheated housing market, the provincial government of Ontario introduced its Fair Housing Plan in April 2017, which included a 15% foreign buyers’ tax among other measures.
Meanwhile, new mortgage rules mandated by the Office of the Superintendent of Financial Institutions, Canada's top banking regulator, took effect Jan. 1, 2018. New mortgage rules required banks to "stress test" borrowers with uninsured loans (generally those loans with down payment of over 20%) for possible higher interest rates.
| February Housing Market Snapshots of Greater Toronto Area | |||
| Feb. 2018 | Feb. 2017 | % Change | |
| # of Sales | 5,175 | 7,955 | -34.90% |
| New Listings | 10,520 | 9,801 | 7.30% |
| Average Price | $767,818 | $876,363 | -12.40% |
| Average DOM | 25 | 13 | 92.30% |
| Source: The Toronto Real Estate Board | |||
Apartments and townhouses outperform single-family homes
The Home Price Index Composite Benchmark, which, unlike average or median prices, takes into account a home’s size, lot size, location, number of rooms and other factors, rose 3.2% year-over-year to 247.3, or a figure of C$751,700 (US$581,898) for the Greater Toronto area as a whole.
This growth was driven by apartment and townhouse market segments, the report says. Benchmark prices for apartments increased 18.82% year-over-year to C$479,200 (US$370,954) while those for townhouses rose 7.46% to C$552,600 (US$427,773).
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On the other hand, benchmark prices for single-family houses slipped 2.06% to C$915,300 (US$708,543) for detached types, and was down 0.75% to C$704,900 (US$545,670) for attached types, according to the report.
The increasing popularity of apartments and townhouses was accentuated in the city of Toronto, the largest and most expensive housing market in Ontario. The benchmark prices for apartments and townhouses there rose 20.91% and 13.08%, respectively. By contrast, benchmark prices for detached single-family homes fell 1.51%.