Toronto’s housing market continues to cool as prices fell last month and the supply of homes for sale spiked ahead of new stress-test rules that went into effect this week.
The benchmark home price index fell in December for the seventh consecutive month, down 0.2% from November, according to data released Thursday by the Toronto Real Estate Board.
The index has fallen 8.9% since May — the largest seven-month decline in the history of data going back to 2000. The average price fell 3.5% from the previous month to C$735,021 ($586,000) and was up just 0.7% from a year earlier.
Toronto’s housing market has fallen over the past few months as the government has tried to curb demand that had driven prices to record highs with harsher mortgage guidelines and regulations. That’s coincided with an increase in supply of new listings in the latter half of the year, resulting in slower price growth, the real estate board said.
“Much of the sales volatility in 2017 was brought about by government policy decisions,” board President Tim Syrianos said in a statement, adding that a foreign buyer tax had a psychological impact on the marketplace even though foreign home buying wasn’t a major driver of sales in Toronto. “Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect.”
Sales in Canada’s biggest city showed some signs of recovery in December, falling 7.1% from a year earlier to 4,930, the smallest yearly decline since the introduction of a foreign home-buyer tax in April. Active listings in Toronto were up 172% from a year earlier, suggesting sellers were trying to sell before new mortgage lending regulations went into effect on Jan. 1.
Toronto’s housing market decline has mainly been in the detached home segment, which experienced the slowest pace of growth in the last two quarters after average prices surpassed C$1.2 million earlier in the year. In contrast, the condominium segment saw double-digit growth.