The slowdown in Greater Toronto’s housing market this spring appears to be more than a one-month blip.
While the average selling price for all properties was still up by 6.7 per cent from a year ago, it’s down from a peak it hit in April — the last month before the Ontario government announced tougher new housing regulations, including a 15-per-cent foreign buyers’ tax.
While some observers expect the market to bounce back, thanks to strong demand and a lack of supply, many analysts are looking at the situation and seeing a major turnaround in the cards.
“What a difference a couple of months make!” Hogue commented.
In that couple of months, the provincial government announced a slate of new housing rules designed to cool off rapidly growing house prices, and improve affordability in the rental market. The 16 measures included a tax meant to discourage speculative property buying by foreigners, and an expansion of Ontario’s rent-control laws.
But some market observers have suggested that the market was already beginning to slow when Premier Kathleen Wynne’s rules came into effect. Some note that tighter mortgage qualification rules, implemented last fall by the federal government, were already starting to bite.
Forecast of soft landing
Hogue is quick to stress that these changing conditions in the market don’t necessarily signal a housing crash.
Even if Toronto moved into buyer’s-market territory, “this would not signal an imminent price collapse. It would in part simply be a reflection of changing sales tactics in the face of more patient buyers.”
The RBC economist forecast that “next phase in the market will be a soft landing rather than a hard landing.”