The number of residential sales in the Greater Toronto Area (GTA) fell 26.7% year-over-year to 7,118 in October, according to the Toronto Real Estate Board, suggesting that the government’s cooling measures might have taken effect.
In the first 10 months of 2017, home sales in the region reached 80,198, down 19.1% from 99,233 last year, according to the board’s monthly market report published Thursday.
"The housing market in the GTA has been impacted by a number of policy changes at the provincial and federal levels," Jason Mercer, the board’s director of market analysis, told Mansion Global.
"Similar to the track followed in the Greater Vancouver Area, it appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind," he added.
Ontario's provincial government introduced a 15% tax on foreign purchases in April to calm the overheated market in Toronto and the areas around Lake Ontario. Although foreign buyers only account for 5% to 7% in the area, the cooling measures might make many potential buyers wary of investing in real estate, Mr. Mercer said.
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Luxury home sales, those priced above C$1 million (US$780,000) and above, amounted to 1,317 in October, falling 31% year-over-year.
For C$2 million (US$1.56 million)-and-above homes, the number of sales dropped to 208 from last year’s 325, down 36%.
Despite shrinking sales, the average home sales price in the Greater Toronto Area continued to edge up. In October it reached C$780,104 (US$608,325), up 2.3% annually.
Additionally, October’s sales increased 12% over the previous month, pointing to a stronger fall market condition, according to Mr. Mercer.
"The same market trajectory was observed in the Greater Vancouver Area following similar government policies," Mr. Mercer said, "After an initial drop-off in sales, some buyers start coming back on the market to take advantage of better housing supply."
In October, there were 18,859 homes available for sale in the Greater Toronto Area, up 78.5% from the same period last year.
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Whether the month-to-month comeback will last for the rest of the year is still unknown. The board is planning to conduct a poll to further monitor the impact of recent and proposed government policy changes on consumer intentions to buy and sell homes.
The Canadian federal government is poised to implement new mortgage rules at the beginning of next year, while the city of Toronto is considering a potential tax on vacant homes.
Traditionally, home sales register big increases between September and October, according to Tim Syrianos, president of the board. However, "This year that increase was more pronounced than usual compared to the previous 10 years," he said in the report.
According to Mr. Syrianos, the large drop in sales on a yearly basis was due in part to the record pace seen last October. "While the number of transactions was still down, it certainly does appear that sales momentum is picking up," he said.