OTTAWA (Reuters) - Toronto home sales plummeted in July from a year earlier and prices were down nearly 19 percent from April as government moves to cool a long housing boom in Canada’s largest city spooked buyers, data showed on Thursday.
Sales in Toronto fell 40.4 percent last month from a year ago, the Toronto Real Estate Board (TREB) said in a report. It was the fourth straight month of declining sales after a years-long boom sparked fears of a bubble.
While prices were up 18.1 percent compared with a year earlier, according to the group’s home price index, they were down 4.6 percent from June as demand dropped and the number of new listings rose again, TREB said.
The average selling price for all home types combined was C$746,218 ($592,990), up just 5.0 percent from last year, and down 18.8 percent from a peak of C$919,449 in April.
The Ontario government introduced a number of measures in late April, including a foreign buyers tax, in a bid to cool the housing market in Toronto and the surrounding areas amid fears of a bubble.
While most data has shown foreign buyers represent only a small portion of buyers in Toronto, the government move sparked a shift in sentiment, TREB said.
“Clearly, the year-over-year decline (in sales) we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve,” the real estate board’s president, Tim Syrianos, said in a statement.
New listings rose 5.1 percent from a year earlier.
The dramatic shift in the Toronto market comes as the Bank of Canada has begun what most analysts believe will be a gradual process of raising interest rates from near historic lows. The central bank raised its key rate by 25 basis points to 0.75 percent in July and markets expect at least one more hike before the end of the year, likely in October. [BOCWATCH]
Some experts have said low rates have encouraged consumers to take on too much debt and fueled the housing boom.
Reporting by Andrea Hopkins; Editing by Subhranshu Sahu