Would-be homebuyers hoping for a slowdown in the real estate market will find little good news in the latest monthly reports from the real estate boards in Canada’s priciest cities.
Sales in both Toronto and Vancouver jumped by just about 24 per cent in both cities in June, compared to the same month a year earlier.
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The average selling price in Greater Toronto was up 3.2 per cent from a year earlier, to $806,755 for all housing types. The average condo was up 6.7 per cent, to $584,019. Detached home prices fell 0.9 per cent $995,043.
Despite the jump in sales in Greater Vancouver, the downward momentum for house prices continued, with condos falling 8.8 per cent over the past year, to $653,200. Detached homes fell 10.5 per cent to $1.417 million.
Toronto’s real estate board warned that the city’s chronic housing shortage could worsen.
Would-be homebuyers “could suffer from a chronically under-supplied marketplace and an acceleration of home price growth to unsustainable levels,” Toronto Real Estate Board (TREB) CEO John DiMichele said in a statement.
That would dash the hopes of politicians and financial regulators who had hoped to address the country’s affordability crisis, as well as rising household debt levels, through policies meant to cool the market.
British Columbia and Ontario imposed foreign buyers’ taxes on the Vancouver and Toronto areas in 2016 and 2017, respectively. OSFI, Canada’s federal bank regulator, introduced new stress tests on mortgage borrowers in 2017 and 2018.
More housing needed, industry says
But many in the industry are coming around to the notion that policies like these, which reduce demand, will not solve the problem because they don’t address supply. Developers and realtors are increasingly calling for a loosening of zoning rules in residential areas to allow more dense housing.
TREB’s DiMichele praised Toronto Mayor John Tory and city council for launching a program to look at opening up single-family home neighbourhoods to more varied types of housing.
In a recent “housing health check,” Royal Bank of Canada noted Toronto is seeing near-record condo construction, but it’s unlikely to be a problem because “there are few signs of overbuilding.”
The bank added that “overstretched affordability remains a significant issue and top vulnerability.”
In Vancouver, the market seems to have “found a bottom,” RBC said, and it expects the market to stabilize, but not before some more price declines in the months ahead.
Like with Toronto, it noted that “affordability is at a crisis level and the biggest source of vulnerability. High condo construction levels are unlikely to flood the market.”