New Home Sales Fall Victim to New Lending Restrictions
GREATER TORONTO— Stricter lending restrictions have led to a drop in consumer confidence and affordability, causing new home sales to decline for the third consecutive month, the Building Industry and Land Development Association (BILD) reported today.
According to RealNet Canada Inc., BILD’s official source of new home market intelligence, 2,792 new homes were sold in October, which is the second-lowest October record. Due to three low sales months in a row, year-to-date sales of 29,322 new homes across the GTA have slipped to 14 per cent below the long-term average, the third-lowest in BILD’s records.
The high-rise sector still holds a prominent share of the market, with 1,914 sales in October 2012 totalling the fifth-highest October on record.
“In an attempt to cool down the market, the federal government has severely affected the building and development industry in the GTA,” said BILD President and CEO Bryan Tuckey. “The introduction of stricter mortgage regulations has triggered a decline in new home sales, and if this trend continues, it will affect job creation in the coming years, restricting economic growth.”
Tuckey added that first-time home buyers are those most affected under the new rules, which have taken a considerable portion of potential purchasers out of the market.
The RealNet New Home Price Index for a low-rise home rose 16 per cent over October 2011 to $616,623 while pricing for high-rise homes increased 2 per cent to $439,328.
BILD will continue to monitor this trend as new projects enter the market in the coming months.