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Toronto home prices in record monthly drop as sales plunge
[TORONTO] Home prices in Canada's largest city posted their biggest monthly drop in at least 17 years in July and sales plunged as government efforts to cool the market and the near-collapse of a mortgage lender made buyers leery.
The benchmark Toronto property price, which tracks a typical home over time, dropped 4.6 per cent to C$773,000 (S$836,171) from June. That's the biggest monthly drop since records for the price index began in 2000, according to Bloomberg calculations, and brings prices down to roughly March levels. Prices are still up 18 per cent from the same month a year ago, according to the Toronto Real Estate Board.
Transactions tumbled 40 per cent to 5,921, the biggest year-over-year decline since 2009, led by detached homes. The average price, which includes all property types, rose 5 per cent to C$746,218 from July 2016. That compares with a 17 per cent increase at this time last year.
New listings rose by 5.1 per cent while active listings soared 65 per cent from a year earlier.
"The year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve," TREB President Tim Syrianos said in a statement.
Three levels of government have introduced housing regulations since October that pushed out many potential buyers. The measures were seen as necessary to cool prices climbing at an unsustainable pace. Meanwhile, shares of Home Capital Group Inc imploded in the spring after the alternative mortgage lender failed to disclose the extent of fraudulent mortgage activity, though it has since stabilised.
Up until April, Toronto prices were breaking records each month and deals were booming. In March, sales were up 18 per cent and the average home price soared 33 per cent from the prior year to C$916,567. That began to turn the following month when listings jumped 34 per cent. Average prices started cooling in May, rising 15 per cent, and then up only 6 per cent in June.
In April, the province of Ontario introduced sweeping rental regulations that included capping rent increases and introducing a foreign investor tax. The move came after the federal government in October put restrictions on insured mortgages, and the nation's financial regulator also proposed restricting uninsured home loans this year.