Toronto home prices still have headroom, suggests an economist with Canada Mortgage and Housing Corporation, the national Canadian housing agency.
“Even though in April we did see more listings flowing onto the market, these markets continue to remain in seller’s territory,” Ted Tsiakiopolous, Ontario regional economist at CMHC, told BNN in a recent interview. “That suggests to us that there’s probably some room for prices to continue to grow in the months ahead, albeit at a slower rate,” he added.
Tsiakiopolous was on BNN discussing the latest monthly figures from the Teranet-National Bank House Price Index. The index showed Toronto metropolitan area home prices surged a record 26.3 per cent in April over where they stood a year before. Compared to March, prices increased 2.6 per cent. “A lot of it is due to fairly tight supply conditions,” Tsiakiopolous noted.
The latest monthly market report from the Toronto Real Estate Board indicated a jump in new listings for the month of April. Some 21,630 new listings appeared on TREB’s multiple-listing-service system in April, outpacing the 17,051 recorded in March. Last month’s new listings represented an increase of 33.6 per cent over what was seen in April 2016.
However, CMHC’s Tsiakiopolous explained it would take more than that for buyer’s to get the upper hand in the market. “Even with the influx of new listings coming onto the market in April… we would need to see listings continue to grow over consecutive months before we start talking about a buyer’s market and the potential for price declines,” Tsiakiopolous stated. He added the Toronto market has recently become “a bit more balanced.”
Tsiakiopolous’ remarks echoed those of Jason Mercer, TREB’s director of market analysis. “It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years,” he said in a statement included in TREB’s Market Watch for April. “Expect annual rates of price growth to remain well-above the rate of inflation as we move through the spring and summer months,” he said in the statement.
Last month, the provincial government introduced Ontario’s Fair Housing Plan, including a Vancouver-style tax on foreign investment in residential real estate across the Greater Golden Horseshoe. However, Marc Pinsonneault, a senior economist at National Bank, suggests Toronto home prices will continue to rise on the back of several factors.
These include “strong fundamentals such as jobs creation, immigrants from other countries and lately a net flow of migrants from other provinces,” he wrote in a research note. “Low interest rates also contribute to the housing boom,” he added.