Congratulations, Toronto, you’ve finally made it to number one. At least when it comes to house prices.
Canada’s largest city saw the fastest pace of house price growth of any major world city in the past year, according to research from analytics firm CoreLogic, carried out for Australia’s Daily Telegraph.
Toronto’s median house price jumped 19 per cent in the past year, beating second-place Sydney, Australia, and third-place Vancouver, which has seen prices slow in the past six months.
The survey measures median house prices, a slightly different measure than the average numbers typically provided by Canadian real estate boards.
Average prices have been growing even more strongly in Greater Toronto, up by 27.7 per cent in February compared to a year earlier, to $875,983.
A house for sale in Toronto's High Park/Roncesvalles neighbourhood. The Financial Accountability Office of Ontario is forecasting double-digit price declines for Ontario's housing markets. (Photo: Chris So/Toronto Star via Getty Images)
Fiscal watchdog says the party’s about to end
But if Ontario’s fiscal watchdog is right, the city’s stay at number one will be short-lived: A house price slowdown is in the offing.
The Financial Accountability Office of Ontario (FAO), which provides independent advice to the provincial legislature, is forecasting "slightly lower (house) prices" over the next three years.
The report also noted there is an elevated risk of a housing correction. In that scenario, it sees house prices declining 10 per cent by 2020, from their 2016 levels. In its worst-case scenario, that becomes a 20-per-cent price decline.
The FAO expects “a leveling out in residential investment over the next several years, consistent with a modest decline in housing prices,” but “a sharper housing price correction remains a significant risk, both for the economy and the province’s tax revenues,” it said in its report.
Toronto is seeing the fastest median house price growth of any city in the world, a new survey says. (Photo: Reuters/Mark Blinch)
The house price decline forecast by the FAO would leave the government with a budget shortfall of between $1.2 billion and $2.2 billion by 2020, the report predicted.
The FAO released its forecast in February, but it went unnoticed by the media until the housing blog Better Dwelling flagged it.
Its prediction goes against some others, which forecast another hot year for Toronto housing. TD Bank chief economist Beata Caranci recently called for another 25-per-cent jump in Toronto house prices this year.
A “strong Toronto home-price forecast is not a vote of confidence in market fundamentals,” Caranci wrote. “It’s getting harder to ignore warning signs that market demand pressures are increasingly reflecting speculative forces.”