The data is in for the 2017 Greater Toronto Area housing market as a whole, and it’s evident that new government regulations and taxes have made a considerable mark, says the Toronto Real Estate Board.
In TREB’s final report of the year, it reveals overall sales clocked in at 92,394 units, 18.3 per cent fewer than 2016’s record-breaking activity.
2017 Real Estate in Review
The real estate board says the impact of the Ontario Fair Housing Plan (FHP), which was introduced in April, is evident, with an abrupt downturn in the second and third quarters following a robust Q1. However, it notes sales recovered slightly in Q4, due in part to the “waning” psychological effect of the Plan. Buyers were also anxious to jump into the market before new mortgage rules took place on January 1, which also bolstered unseasonably strong end-of-year activity.
Average home values still rose 12.7 per cent to $822,681 year over year, though much of that growth occurred during “extremely tight” conditions in the first quarter, prior to the FHP. Price growth then cooled throughout the remainder of 2017 as an influx of inventory and fewer sales tilted the GTA toward balance rather than the frantic seller’s market that had become the norm.
The Impact of the Ontario Fair Housing Plan
Tim Syrianos, TREB’s president, says it’s clear real estate trends were controlled by these new policies rather than natural market supply and demand forces.
“Much of the sales volatility in 2017 was brought about by government policy decisions,” he says, adding that new mortgage stress tests will likely continue to shape the market.
“Looking forward, government policy could continue to influence consumer behavior in 2018 as changes to federal mortgage lending guidelines come into effect.”
He also says that while much emphasis was placed on the impact of foreign real estate buyers, culminating in a 15-per-cent tax as part of the FHP, research from the board, province and Statistics Canada indicate they were not a major force.
However, the shift in demand and prices was not equal across all home types – the detached home segment softened the most, while condos drove the majority of market activity. That’s indicative that steep affordability continues to be the greatest consideration for buyers, says Jason Mercer, TREB’s director of market analysis.
“It is interesting to note that home price growth in the second half of 2017 differed substantially depending on market segment,” he says. “The detached market segment – the most expensive on average – experienced the slowest pace of growth as any buyers looked to less expensive options.
“Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions.”
A Seasonal Slowdown Over the Holidays
While the GTA housing market enjoyed a warmer-than-usual late autumn, December experienced the sharp downturn associated with the holiday season; many sellers avoid listing in the later part of the month, as vacations and family time distract from open houses. Check out the month—over-month and year-over-year difference in the infographic and chart below:
Month-Over-Month and Year-Over-Year Price Difference
