The closely watched Toronto housing market showed signs of a slowdown last month, as the price of benchmark detached homes fell by almost four per cent in the past year, although condos appreciated by more than three times that amount.
The Toronto Real Estate Board said Tuesday the average selling price of a detached home in the 416 area code was $1,283,981 in January, a decline of 3.9 per cent from the same month a year earlier.
Prices for other types of housing, however, were higher. Semis changed hands for an average price of $936,623, townhomes sold on average for $712,186 and condominiums went for $543,279 — increases of 3.7, 8.2, and 15.1 per cent, respectively, over the past 12 months.
Across all types of housing, the average property sold for $736,783 last month. All in all, that’s a decline of 4.1 per cent over the past year.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” said Jason Mercer, TREB’s director of market analysis. In January 2017, “we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace.”
Tight supply a year ago pushed up prices to a deceptively higher level than they would otherwise have been, which makes annual comparisons to such a strong month look worse than they are.
But “it is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018,” said Mercer.
The volume of homes being sold is also sharply lower.
January is not typically a busy month for home sales, but the number of properties sold across all types of housing in the city was down by roughly 20 per cent compared to last year. Still, January 2017 was the busiest-ever January for home sales in the city, with 5,155 properties changing hands.
The past year has also seen two major policy changes that have had a significant impact on the market.
Last spring, Ontario implemented new rules, including changes to rent control and a new tax on foreign buyers. And federal banking regulator the Office of the Superintendent of Financial Institutions (or OSFI) now forces lenders to stress test buyers’ finances at tougher levels, which is limiting their purchasing power.
TREB blames both moves for cooling the market, but said the impact of both should lessen over time.
“As we move through the year, expect the pace of home sales to pick up, as the psychological impact of the Fair Housing Plan starts to wane and homebuyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals,” TREB president Tim Syrianos said.