Photo: James Bombales
After a spring of record-breaking prices, and a summer of plunging ones, Toronto’s housing market seems to have finally balanced out. The question is, will it last?
Not according to Derek Holt, head of capital markets economics at Scotiabank. “Toronto’s prices are down in year-ago terms, and will probably follow the pattern observed in Vancouver where prices are recovering from the immediate aftermath of the foreign buyers tax,” he writes, in a recent note.
Vancouver saw prices dip when the provincial government introduced a foreign buyer tax in the summer of 2016. But prices have since rebounded and now exceed pre-tax levels. Holt believes it is possible that Toronto maybe headed down the same path.
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It’s a sentiment shared by Toronto Real Estate Board president Tim Syrianos. “Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane,” he wrote in a statement last week.
TREB’s latest data release found that the MLS Home Price Index composite benchmark price was up 8.4 per cent year-over-year in November, while both sales and listings were also up.
“We have seen an uptick in demand for ownership housing in the GTA this fall, over and above the regular seasonal trend,” wrote Syrianos.
According to CIBC Senior Economist Benjamin Tal, the surge in demand is all part of growing housing unaffordability in the GTA, driven by a lack of supply.
“Without dealing with the real fundamental issues facing the GTA, these policy changes are able to provide only temporary relief,” Tal told BuzzBuzzNews.
That’s because, according to Tal, the GTA is facing a significant lack of land supply, as provincial growth policies limit how quickly serviceable land becomes available. Of the 338,000 hectares that the plan affects, only 15 per cent is designated for low density residential development. Lengthy applications processes mean it could take years for it to come onto the market.
“If you look at the long term trajectory, and where prices will be, say, 10 years from now, I think they will be increasingly more and more unaffordable to the average Canadian,” says Tal.