Toronto’s luxury housing market is feeling the greatest impact of the declines from last year’s dizzying growth, with prices falling and unit sales slumping by almost half.
Sales of detached homes in and around Canada’s biggest city fell 46% in March from the same month a year ago, while the average price fell 17% to $1.01 million, according to new data from the Toronto Real Estate Board. That dragged down the average selling prices for all housing types by 14% from a year earlier to $784,558, the biggest drop since 1991.
“Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types,” the board wrote in its monthly report, as quoted by Bloomberg.
“In addition, the share of high-end detached homes selling for over $2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price."
Prices continued their stabilization of the past few months as home owners get ready for the traditionally hectic spring season. Benchmark prices rose 1.2% in March from February, including a 1.1% gain for detached homes and a 1.8% increase in condos.
However, benchmark prices fell 1.5% year-over-year, the first decline since 2009, led by a 6.7% drop for detached homes.
Read more: Toronto illustrates stark divergence between two prominent asset classes
Canada’s biggest housing market has been adjusting to new rules that make it harder for buyers to qualify for a mortgage, along with rising interest rates. Federal and provincial governments have been gradually tightening market conditions to tame prices that skyrocketed last year.
“Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months,” TREB director of market analysis Jason Mercer stated in the report. “It makes sense that we haven’t seen prices climb back to last year’s peak.”
The second half of the year should see the annual rate of price growth improve as sales increase relative to the below-average level of listings, Mercer added.
New listings fell 12% to 14,866 from March 2017 and were down 3% compared to the average for the previous 10 years.