Canada’s hottest residential markets have benefited from better-than-average sales activity, a development that both Vancouver’s and Toronto’s real estate board attributed to buyers purchasing en masse
ahead of new mortgage requirements taking effect in January.
Vancouver area home sales jumped 7.1% from September to October with 3,022 properties sold, and 35.2% on a year-over-year basis, according to the Real Estate Board of Greater Vancouver.
Board president Jill Oudil stated that the federal government’s moves to tighten mortgage requirements contributed to a short-term burst in activity. Among the changes that the Office of the Superintendent of Financial Institutions has introduced is a requirement that homebuyers who do not require mortgage insurance still have to show they can make their payments if interest rates rise.
“Many buyers are trying to enter the market before the changes are in place,” Oudil said, as quoted by The Canadian Press.
Read more: Activity in Toronto, Vancouver exhibiting sustained recovery
In Toronto, home sales rebounded by 12% from September to October with 7,118 homes sold, according to the Toronto Real Estate Board
. This represented a decline of around 27% from October 2016.
According to TREB president Tim Syrianos, Toronto generally sees a jump in sales in the September-October interval, but he noted that this year’s “was more pronounced” compared to the previous decade.
“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” Syrianos stated.
The GTA market was dampened somewhat after the provincial government imposed a number of measures, including a tax on foreign buyers, earlier this year.
In addition, the Bank of Canada raised interest rates twice in recent months to the current overnight rate of 1%, signalling a clampdown on cheap borrowing and driving the big bank prime rates as well as the cost of variable-rate mortgages higher. The cost of new fixed-rate mortgages have also risen as yields on the bond market moved up.
The policy-driven changes in the Toronto market, which include a tax on foreign buyers, have followed the trajectory of the Vancouver market, with a pullback directly after new rules were introduced followed by a pick up after a relatively short time, according to TREB’s director of market analysis Jason Mercer.
“It appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind.”
The average selling price for a home in Vancouver last month was $1,042,300 — up 0.5% from September and 12.4% from the same time last year, according to the Vancouver board. In Toronto, the average selling price was $780,104, up less than 1% from September but up 2.3% compared with October 2016.
Price growth in both cities was driven by appreciation in townhomes and condos.
Foreign home buyers continue to flow into Vancouver
Toronto condo sector might moderate in 2018