The Toronto Real Estate Board recently reported that a fall in new supply will likely lead to sustained price growth through 2019.
Sales fell 2.5 per cent year over year to 5,025 transactions, while new listings fell 6 per cent in February to 9,828.
“Despite sales being down year over year, new listings actually declined by a greater annual rate. This suggests that market conditions became tighter compared to last year. Tighter market conditions continued to support year-over-year average price growth,” reports TREB.
As it stands, however, housing prices have softened.
The average price of a property across TREB declined 1.5 per cent to $780,400. Detached houses fell 2 per cent to $981,000, while condos rose 6 per cent to $562,000.
In other words, the only thing currently holding the price floor in place is the least expensive market segment – condo units.
TREB blames both the overall decline in property prices, especially among expensive single-family homes, on the new mortgage stress test, which has forced borrowers to qualify at a rate at least 2 per cent above their contract.
“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy,” said TREB President Garry Bhaura. “The stress test should be reviewed and consideration should be given to bringing back 30 year amortizations for federally insured mortgages. There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability.”
To off-set the stress test, TREB wants 30-year mortgage amortization back for buyers who put down less than a 20-per-cent down payment, an option which was cancelled in 2011 by Former Finance Minister Jim Flaherty because of the risk involved. Borrowers will have lower monthly payments with a longer amortization, but will also pay far more interest over the long run. And when borrowers are up for renewal, they also face the high chance that interest rates have risen, leaving them with higher monthly payments than they may be able to afford.
Smaller cities just outside of TREB’s region have proved a bit more resilient, likely drawing buyers priced out of Toronto. MLS Barrie, for example, reported that the average property price rose 2.4 per cent year over year to $519,500, while Guelph real estate rose almost 5 per cent to $542,000.
The most expensive region across TREB this February remains King City, with an average home selling for almost $1.4 million. The second most expensive is Richmond Hill, at almost $1.1 million, and the third most expensive area is Oakville, at just under $1 million.
For more details on the Toronto housing market this February, check out the infographic below:
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