GTA resales slump—and rate hike won’t help
September 15, 2017
Greater Toronto Area (GTA) resale home prices and sales continued to decline in August, and a recent hike in lending rates won’t help to correct the 20 per cent price decline since the March peak, analysts say.
The average price for all housing types declined 1.9 per cent from July to $732,292, according to the Toronto Real Estate Board (TREB). This was down from March, when the average price in the Toronto region was nearly $1 million. Compared with August 2016, the average home price was up 3 per cent, while the benchmark price had increased 14.3 per cent, to $755,400.
Sales dropped 35 per cent to 6,357 transactions in August on a year-over-year basis, while new listings fell to 11,523 homes—the lowest level for the month in seven years.
Detached home sales were down 41.6 per cent from a year earlier, while prices were up 0.3 per cent during the period.
The condo sector led the market, with average sale prices up 21.4 per cent from a year ago to $507,841 in August. Condo sales were down 28 per cent from August 2016, however.
A September increase in the Bank of Canada lending rate, which increased a quarter percentage point for the second time since July, pushed its overnight lending rate to 1.0 per cent. The increase will contribute to the slowdown in the GTA housing market said Sherry Cooper, chief economist of Dominion Securities.
“Longer term, the impact will depend on how many more rate hikes and how quickly they happen,” Cooper said.