Photo: James Bombales
October saw GTA home sales spike, in what one expert is calling the end of the psychological impact of Ontario’s Fair Housing Plan.
According to the Toronto Real Estate Board (TREB), the number of homes sold in the GTA last month jumped 12 per cent from September, signalling stronger fall market conditions.
“Every year we generally see a jump in sales between September and October,” writes TREB board president Tim Syrianos, in a statement. “However, this year that increase was more pronounced than usual compared to the previous ten years… It certainly does appear that sales momentum is picking up.”
TREB director of market analysis Jason Mercer says the numbers could reflect the beginning of the end of the Fair Housing Plan’s effect on the market.
“Similar to the track followed in the Greater Vancouver Area, it appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind,” writes Mercer, in a statement.
The plan, which was introduced by the province in April, triggered a slowdown in the market over the summer. Metro Vancouver’s foreign buyers’ tax, introduced in the summer of 2016, initially had a similar effect. But prices have since rebounded and now exceed pre-tax levels.
As sales rose in the GTA last month, so did prices. The average price of a home was $780,104, up 2.3 per cent from $762,691 in October 2016.
The average price of a townhouse was up 7.4 per cent month-over-month to $629,507, while the average condo price rose 22 per cent year-over-year to $523,041.
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While these numbers represent year-over-year price growth, they are still well below the record-setting year-over-year growth numbers seen in March, before the province introduced its housing plan.
New mortgage regulation could be behind the surge in sales and prices, as buyers rush to make purchases before the rules come into effect on January 1.
Announced by the Office of the Superintendent of Financial Institutions (OSFI) two weeks ago, the new mortgage stress test will require all uninsured borrowers to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract rate plus an additional 2 per cent.
“Since OSFI announced that tighter mortgage rules would come into effect in January, our agents are working with several buyers wanting to close before then,” writes Zoocasa CEO Lauren Haw, in a statement.
The Toronto-based online real estate brokerage is forecasting a busier market than expected heading into November as a result of the rules.