More balanced market conditions are expected for the second half of the year after home sales slump in June.
According to the Toronto Real Estate Board (TREB), sales were down by 37.3% last month compared to June 2016, meanwhile new listings were up by 15.9%.
The increase in listings has also resulted in the moderation of price growth in the GTA. June’s average selling price was up 6.3% to $793,915 compared to last year. Although, comparing the average selling price in the city of Toronto during the first six months in 2017, it was up by 20.9% to $870,016.
TREB president Tim Syrianos says that the city is currently in a “period of flux” following the recent government policy announcement regarding the Fair Housing Plan – intended to help more people find affordable homes. Part of the plan included the introduction of Ontario’s Non-Resident Speculation Tax (NRST), also known as the foreign buyers’ tax.
“On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan,” said Syrianos in a statement. “On the other hand, we have existing home owners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a moderating annual pace of price growth.”
After the government announced the Fair Housing Plan, TREB commissioned Ipsos Public Affairs to conduct two consumer surveys: one focused on home buyers; the other focused on home sellers.
The survey found that 30% of GTA households are likely to list their homes over the next year, with 15% saying that the Fair Housing Plan is the primary reason they would sell their homes. As for buyers, the survey indicated a sharp decline of would be first-time buyers, with only 40% likely to buy compared to 53% as indicated in a fall survey. The Fair Housing Plan affected 10% of households, who said they wouldn’t purchase a home over the next year because of it.
“The recent Ipsos survey results suggest that home buying activity in the GTA will remain strong moving forward,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.”The year-over-year dip in home sales we have experienced over the last two months seem to be the result of would-be buyers putting their decision to purchase temporarily on hold while they monitor the impact of the Fair Housing Plan. On the supply side of the market, it certainly looks as though buyers will benefit from more choice in the second half of 2017 compared to the same period in 2016.”
Looking ahead in 2017, TREB forecasts home sales will be down, but listing activity will be up, resulting in balanced market conditions that were lacking at the start of the year.