No stopping in sight for the GTA housing market

Toronto Real Estate Board (TREB) just released last year’s statistics: 2016 became a second consecutive record year for home sales in the GTA. Home sales through TREB's MLS® System in the Greater Toronto Area grew by almost 12% to around 113 thousand units sold.

The number of sales in December grew slightly less, by around 9% over December 2015, mainly due to the declining number of properties listed on the GTA market: active listings in the MLS® System at the end of December were at their lowest point in 15 years. As a result, the MLS® Home Price Index in that month grew 21% as compared to December 2015. Overall in 2016, the price index grew by more than 17% and the average home selling price amounted to almost $730 thousand.

The year 2016 saw some policy changes aimed at restraining the demand for real estate. In February, the requirement to put 10% down on the share of the property price exceeding $500 thousand was introduced. The “stress test” for mortgage applications, which is applied to all insured mortgages when a buyer puts down less than 20% of the home value, was introduced in October. Currently, the City of Toronto's Budget Committee is considering an additional 0.5% Land Transfer Tax on all buyers.

Time will tell if these measures will be able to sober up real estate price growth. It seems that, for the time being, these kinds of policies may limit access for first time buyers to the real estate market rather than significantly affect the market as a whole. But these policies are important in so far as potentially constraining growth of household debt which is reaching elevated levels in Canada.

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