Toronto home prices continued their unabated climb last month, the city’s real estate board said Wednesday in what could serve as a prelude to the critical spring homebuying season in the country’s hottest housing market.
The average selling price for all properties in the Greater Toronto Area jumped from $688,011 to $916,567 over the last year — a rise of 33.2%, the Toronto Real Estate Board (TREB) said.
Demand for housing continues to exceed supply, one of the underlying causes of the soaring price increases, TREB said.
What to do
Politicians, particularly in Ontario, have been under growing pressure to rein in Toronto housing prices that have far outpaced fundamentals such as wage growth. Ontario Finance Minister Charles Sousa has indicated there will be measures in the upcoming budget to address the housing market.
And the federal budget committed to gathering data on all residential property in Canada, including foreign homebuyer activity.
Realtors have told the government not to introduce policies they say would knock the industry off-kilter, such as a tax on foreign buyers, as worries grow that Toronto is on the cusp of a housing price crash like the one it experienced nearly 30 years ago.
In a report on rent control, Benjamin Tal, deputy chief economist at CIBC World Markets, says, “You can’t tax your way to real and sustainable change.” He says more rental units are needed, but not rent control, which results in less incentive for developers to build rental properties and exacerbates price increases. He gives examples of rent control gone bad in New York City and Stockholm.
In a statement, TREB president Larry Cerqua says, “It has been encouraging to see that policy-makers have not implemented any knee-jerk policies regarding the GTA housing market.”
“Policy-makers must remember that it is the interplay between the demand for and supply of listings that influences price growth.”
More sales mean more demand
The number of properties listed on the market was up by 15.2% from the same time last year, but the number of sales rose by 17.7%.
Jason Mercer, TREB’s director of market analysis, said that trend will have to reverse itself in order for the city’s housing market to stabilize.
“A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance,” Mercer said.
The average price of detached houses in the Greater Toronto Area was $1.21 million in March, up 33.4% from last year. For the city of Toronto, the average price of detached properties hit $1.56 million, an increase of 32.8% from March 2016.
The MLS home price composite benchmark price for all communities measured by TREB was $772,500, up 28.6% from a year ago.
Read the CIBC report here.