Toronto home prices in fastest annual gain in over two years
A shrinking supply of available homes for sale in Canada's largest city continued to drive prices higher last month, bringing annual increases to the strongest in more than two years.
Benchmark prices climbed 1% in January and are up 8.7% from a year earlier, the Toronto Real Estate Board said Thursday. That represents the biggest annual increase since October 2017, the month controversial stress tests for mortgage eligibility were announced by the country’s financial regulator. The price gains are being fueled by a combination of strong demand and shrinking supply, with new listings down 17% in January from a year ago.
"Strong sales up against a constrained supply continues to result in an accelerating rate of price growth," Jason Mercer, director of market analysis for the Realtor group, said in the statement.
Toronto's housing market is bouncing back after a dismal period that lasted through 2018 and early 2019. A combination of steady population growth, low unemployment and cheap borrowing costs have brought buyers who had been sidelined by the stress tests back into the market, Mercer said.
Still, the tightening supply has had a dampening effect on sales in recent months, with the number of transactions falling 2.7% in December. That trend reversed sharply in January, with sales rising 4.8% during the month on a seasonally adjusted basis to the highest level in more than a year.
The average sale price for a detached homes was C$1,038,247 in January, up 10.5% from a year earlier. Condo prices jumped 15.1% from a year ago, to C$630,047.
The board sees another solid year ahead for new home sales in the Toronto area, driving by migration, a strong labor market and low borrowing costs. It's forecasting home sales of 97,000 in 2020, up by around 10% from 2019 and an almost 10% increase in the average selling price.
"Market conditions will become tighter, as transactions will continue to outpace the growth in available listings," Michael Collins. TREB president said at the board's 2020 outlook conference Thursday. "The resulting increase in competition between buyers will likely result in an acceleration in price growth across all major market segments."