OTTAWA (Reuters) - Toronto home prices and new listings surged in April from a year earlier while sales fell, the Toronto Real Estate Board said on Wednesday, suggesting the market may be starting to rebalance after new housing rules were put it place amid fears of a bubble in Canada’s largest city.
The industry group said the average home price rose 31.7 percent in April from a year earlier, while new listings rose 33.6 percent and sales dipped 3.2 percent.
Toronto is the capital of the province of Ontario, which introduced a 15 percent tax on property purchases by foreign buyers as part of 16 measures designed to cool Toronto’s red-hot housing market.
While the real estate group said it was too early to say whether the surge in new listings was in response to the new rules or simply sellers responding to the recent surge in prices, the market will rebalance if the trend continues.
“It was encouraging to see a very strong year-over-year increase in new listings. If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions,” said 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. Expect annual rates of price growth to remain well above the rate of inflation as we move through the spring and summer months,” he added.
Economists have said the foreign buyers tax should cool demand, even though there is little data showing that foreign buyers are a large part of the market, because it shows the government is determined to slow the market.
The Toronto Real Estate Board said its data showed foreign buyers were not a major factor in the “Greater Golden Horseshoe” area surrounding Toronto.
It said 2.3 percent of buyers between 2008 and 2017 had a mailing address outside of Canada. The share was 2.2 percent in 2016 and 2.6 percent for the January through April period in 2017. A survey of its members in the fall of 2016 showed 4.9 percent of deals between the fall of 2015 and the fall of 2016 were done by foreign buyers, the group said.
Reporting by Andrea Hopkins; Editing by W Simon and Chizu Nomiyama