Toronto’s housing market is expected to further soften in 2018 after peaking in 2016 and cooling off last year, according to the annual market report released Tuesday by the Toronto Real Estate Board.
In 2017, the number of residential sales in Toronto, the second largest housing market in Canada after Vancouver, declined 18% annually to 92,394. By comparison, the market reached a record 113,000 residential transactions in 2016, according to the report.
Meanwhile, the average sales price in Toronto in 2017 rose 12.7% annually to C$822,681 (US$667,277), although much of that growth was attributable to a 30% increase registered in the first quarter before a series of government curbing measures kicked in, the report said.
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Last April, the Ontario provincial government introduced its Fair Housing Plan to tame the heated real estate market in the Greater Toronto Area, which includes a 15% foreign buyers’ tax similar to Vancouver’s.
Following the onset of the Fair Housing Plan, "market conditions started to balance out, with the annual rate of price growth moderating in the second half of the year," the board’s president Tim Syrianos said in the report.
New mortgage lending guidelines enacted on Jan. 1 will likely have a negative impact on Toronto’s housing market moving forward, especially in the first four months of this year, the report said.
The trade group predicts that the number of residential sales in 2018 will range from 85,000 to 95,000, and the average selling price will range between C$800,000 and C$850,000 (US$649,000 and US$689,000).
While detached homes will see subdued price growth, tight market conditions for condominium apartments will underpin continued double-digit price growth, according to the report.
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Overall, Toronto’s housing demand will remain solid in 2018, driven by strong economic and social fundamentals, including immigration-driven population growth, job creation and low unemployment, said Jason Mercer, director of market analysis at The Toronto Real Estate Board.
However, in the short term, "Higher borrowing costs and the effects of federal and provincial policy decisions will act as a drag on demand" for housing ownership, he said.