Toronto home prices decline halted in August
Last month, Canada’s biggest housing market stopped a several months period of home prices sharp declines.
The latest report by the Toronto Regional Real Estate Board (TRREB) shows that the average home price in the Greater Toronto Area (GTA) was $1,079,500 in August, marking almost no changes from July’s $1,074,754.
Such results point to a certain stabilization, following a five-month drop by almost 20% (on a non-seasonally adjusted basis) compared to February’s record level of $1,334,544. The reason for such a decrease is the central bank’s aggressive rate hike cycle aimed at cooling down the market activity.
While home sales in the GTA were down sharply in August on a year-over-year basis, the 5,627 transactions represent a monthly hike of almost 15%. According to TRREB, the increase reaches 11% on a seasonally adjusted basis.
However, the Board keeps calling for regulatory changes that could reduce pressure from homebuyers.
TRREB chief executive officer John DiMichele says the Office of the Superintendent of Financial Institutions (OSFI) needs to consider whether it’s still necessary to use today’s stress test, which requires buyers to prove they can service their mortgage at the higher of 5.25% or the contract rate plus 2%.
“Moreover, OSFI should consider canceling the stress test for existing mortgage holders who want to search for the best available rate when it comes to renewal instead of making them stay with their existing lender trying to avoid the stress test,” – he noted.
In June, the head of OSFI promised to review the stress test in order to make sure it’s still serving its purpose.
“We review it at the end of every year in December, and we’ll do it again. In case changes are necessary, we are ready to make them, and we’ll be as transparent as possible. We’ll give it a fresh look and make sure it increases the resilience of the national real estate system,” – said superintendent Peter Routledge.
TRREB MLS System Sales and Average Price by Home Type August 1-31, 2022
| Sales | Average Price | |||||
| 416 | 905 | Total | 416 | 905 | Total | |
| Detached | 511 | 2,084 | 2,595 | 1,648,298 | 1,313,839 | 1,379,700 |
| YoY% Change | -26.0% | -30.3% | -29.5% | -1.7% | -3.7% | -3.1% |
| Semi-Detached | 159 | 367 | 526 | 1,127,429 | 942,628 | 998,490 |
| Годовое изменение в % | -29.6% | -28.7% | -29.0% | -1.7% | -3.7% | -3.1% |
| Townhouses | 182 | 753 | 935 | 913,410 | 897,140 | 900,307 |
| YoY% Change | -44.0% | -35.9% | -37.7% | 0.4% | 3.7% | 2.9% |
| Condo Apt | 1,028 | 479 | 1,507 | 736,940 | 656,339 | 711,321 |
| YoY% Change | -40.6% | -40.5% | -40.6% | 2.6% | 6.0% | 3.6% |