“Buyers started moving off the sidelines in the spring, as evidenced by strong year-over-year price growth throughout the second quarter,” Jason Mercer, the Toronto Real Estate Board’s chief market analyst, said on Thursday as the group released its June numbers.
“However, because we saw virtually no change in the number of new listings, market conditions tightened and price growth picked up, especially for more higher-density home types, which, on average, are less expensive than traditional detached houses and therefore provide more affordable housing options under the new OSFI stress-test regime.”
Mr. Mercer was referring to new mortgage-qualification rules brought in at the beginning of last year by the Office of the Superintendent of Financial Institutions, the federal bank regulator.
Those stress tests helped to slow the rapid pace of borrowing in Canada amid concerns over a debt and housing bubble.
Greater Toronto Area home sales climbed 10.4 per cent in June from a year earlier, to 8,860, which was down from a month earlier.
Average prices rose 3 per cent to $832,703 from a year ago, but were down from May, while the MLS Home Price Index, which is considered a better measure, rose 3.6 per cent since the previous June.
Of course, home type and location are still everything, and a detached home in Toronto’s 416 area code will still run you an average of $1.3-million, which is actually down 1.6 per cent from a year ago.
The sharp year-over-year gains were “still versus a very easy comparison when the market was struggling a year ago,” said Bank of Montreal senior economist Robert Kavcic, noting that, on a May-to-June basis, sales dipped after three straight “solid” months.
“Over all, the market balance was relatively steady and indicative of a market that has all but balanced out – the sales-to-new-listings ratio is close to the 10-year average again,” Mr. Kavcic said.
“That has helped firm up prices, and June was no exception.”
New listings in the region dipped 0.4 per cent in June, pulling active listings down 5.7 per cent.
“All told, this is playing out largely as expected, with the market firming up after absorbing past policy changes, and with the help of meaningfully lower five-year fixed-mortgage rates,” said BMO’s Mr. Kavcic.
The first half of the year tells a “similar story” to June alone, compared with a year earlier, TREB said.
“Sales were up by 8.5 per cent, while new listings were up by less than 1 per cent,” the group said.
“This shows that sales accounted for a greater share of listings compared to last year, which means that competition between buyers increased, resulting in renewed price growth in many segments of the market.”
The Globe And Mail
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