"If interest rates average 2.50 per cent in 2015 I am really not sure how cool GTA property sales will get," Ron Butler
of Butler Mortgage wrote on MortgageBrokerNews.ca "If the rates move up -- not very likely -- cooling will occur likewise if unemployment spikes but failing those brakes; things will likely be as busy as last year. Someday property values will reverse and sales will crater but not likely this year."
The comment was in response to a TD Bank report that stated the Toronto housing market will start to cool this year.
“While the GTA housing market has shown few signs of slowing this year, one thing remains certain: Housing booms don’t last forever,” TD Bank wrote in a special report, entitled GTA Housing Boom Masks Growing Structural Challenges
released Monday. “The million-dollar questions are: When and to what extent will the downswing take place? TD Economics’ baseline GTA housing forecast is a tale of headwinds and tailwinds, with the former likely to win out and cool the market beginning in 2015.”
The condo market is expected to lead the way toward a correction, with 60,000 new units expected to be built in the next few years. TD estimates that the market will be oversupplied by 25,000 units.
“The impact of increased supply of condo rental units is expected to only partially offset by rising rental demand,” the report states. “In this environment, the cost of condos will likely exceed what an investor can earn on the rent.”
Average resale price growth is expected to drop from its current mark of five per cent to near zero this year. However, the bank assures brokers and industry players that the housing correction will be much less severe than what some organizations have predicted.
“This relatively benign view is at odds with some predictions that have been bandied about in international media pointing to massive price over-valuation on the order of 40- 50 per cent … those expectations are built on spotty analysis,” the report states.
One major bank may have wanted to hold off on its prediction for one Canada’s hottest housing markets until after the Bank of Canada announcement.