Last week, the Toronto Real Estate Board (TREB) released its market report for August. There has been a general cool-down in the GTA real estate market, in partly in response to new regulatory measures introduced by the Provincial Government earlier in April. There was an overall 34.8% decrease in sales compared to August 2016 with only 6,357 transactions in August 2017. New home listings fell by 6.7% compared to August of last year. Detached home sales was probably the most affected segment of the market overall, with average prices around 20% lower than in April 2017.
However, all these jaw dropping stats aside, the actual house prices were up 3% from last year bringing an average price of a GTA home to $732,292. In addition, TREB’s home price index composite benchmark, designed to smooth out variations and which accounts for typical homes throughout TREB’s market area, was actually up by 14.3% on a year-to-year basis in August. This means that some areas in GTA were affected differently and notably some areas such as Durham, Peel and Halton regions remained very much a seller’s market. The condo market in particular continued to outperform all other segments, up 21.4% from last year to an average price of $507,841 in August 2017. It is interesting to note that this is the first time the condo market has outperformed the single detached home category and the first year it has gone into double digit growth. Similarly, the rental market remains an equally hot area. Most rentals in the Toronto area are leased for over listing price, often with multiple offers and additional incentives.
While summer’s month-to-month sales also saw a decline, it can more typically be attributed to a slower than usual, traditionally slow seasonal market. This decline in sales may also be attributed to the psychological slow-down effect of the new provincial regulations on the Buyers. Reports indicate that the economy in the GTA continues to grow and is at a healthy pace which may play a key factor in normalizing the relationship between buyers and amount of listings on the market, which results in a well balanced real estate market rather than an unsustainable market driven by irrational decisions, bidding wars and double digit growth. A return to normalcy is welcomed by both sides in the long-run.
Despite the general cooling off during the summer since the announcement of new measures and recent interest rate hike , the GTA real estate market should not be dismissed so fast. TREB consumer research suggests that buyers that have previously put off their decision are set to return to the market and most likely in the fall. Most real estate purchases are not driven by speculation and cannot usually be subject to indefinite delay, often arising by pressing social and financial obligations of the Buyers’ everyday lives. Current market predictions are that as more buyers jump into the fall market that has a smaller number of listings, this can affect the rate of price increase.
GTA real estate prices are expected to continue to grow year-to-year as the main factors that drive the real estate market have not changed. Population growth, low-interest rates, strong GDP growth and high employment figures continue to indicate that the region remains an attractive option for both local and international buyers.
To view the full report click here.