New data released by the Toronto Regional Real Estate Board (TRREB) last week revealed that the average listing price for a home in the GTA fell six per cent month-over-month in July to $1,074,754.
Sales are also down 47 percent from July 2021.
In a report published on August 4, RBC senior economist Robert Hogg said recent data from property councils highlighted that higher interest rates are starting to take a “huge toll” on the market.
Hogue said that with further increases coming, prices will likely continue to decline in the coming months.
That forecast, it should be noted, contrasts with a Royal LePage report last month that contained a more favorable forecast for sellers in which values would more or less hold for the rest of the year after some declines in second semester.
“Our expectations for further increases from the Bank of Canada—another 75 basis points in the overnight rate by the fall—will continue to chill the market in the coming months,” Hogue said. “We expect the downturn to intensify and spread further as buyers take a wait-and-see approach while they see the impact of higher lending rates. Canada’s less affordable markets, Vancouver and Toronto, and surrounding areas, are most at risk due to overstretched affordability and outsized price gains during the pandemic.”
The Bank of Canada has raised its overnight lending rate by 225 basis points since March and has warned that further increases will be needed as inflation remains at a near 40-year high.
In his report, Hogue noted that the housing correction “is now very much underway across Canada,” but said it is particularly pronounced in the pricier markets of Toronto and Vancouver.
In fact, Hogue said home resale activity in Toronto is at its slowest pace in 13 years, outside of the early days of the COVID-19 pandemic.
The inventory of available homes is also up 58 percent from a year ago, he noted.
“With more options to choose from and higher interest rates shrinking their shopping budgets, buyers can squeeze significant price discounts from sellers,” he said, noting that the average price of a home in the GTA is down 13 percent since March. . “We expect buyers to remain on the defensive in the coming months as they deal with rising interest rates and poor affordability.”
While Hogue said apartments in the city of Toronto are likely to remain “relatively more resilient,” he said prices elsewhere will continue to fall for now, especially in the 905 zone “where property values have skyrocketed during the pandemic ».
July data from the TRREB suggests that the average price of a home in the GTA was still up one percent from July 2021.
