While the Toronto residential real estate segment has long been one Canada’s leading hubs for sales activity and price growth, the city is now entering a stage where things become more unpredictable for the residential real estate market, according to a CMHC analyst.
“I think we’re at a critical time in terms of the market and hard to tell where exactly it’s going to turn,” CMHC’s GTA principal of market analysis Dana Senagama said, as quoted by CBC News.
“But I do think things will start to slow beginning in 2018,” Senagama added.
The analyst argued that the city’s long-running affordability issues will scare off more and more prospective buyers. Along with higher borrowing costs and tighter federal mortgage rules, the Toronto market is expected to suffer a noticeable cooling within the next few quarters, Senagama stated.
Also, the completion of approximately 69,000 units currently under construction in the GTA would augment the region’s supply, which would cool down demand to a certain extent.
However, the Ontario Real Estate Association warned that the new homes are less likely to be move-in-ready right upon completion, and that even the supply improvements won’t be enough to address the demand.
“I'm happy to see CMHC numbers show more housing coming to the marketplace,” OREA CEO Tim Hudak said. “In the city of Toronto, we have less than 1,000 detached homes for sale, and you have a lot of people who want those homes so you get these huge bidding wars.”
In its latest predictions, TD Economics forecast home price growth rates to “cool” to between 3 and 5 per cent by next year—a much more sedate pace compared to the 20 to 25 per cent projected for 2017.
Ontario Finance Minister Charles Sousa has recently urged the federal government to restrain speculative investing in Canadian housing markets by increasing the taxable amount to above 50 per cent of real estate sale profits.
Speculation has been cited by multiple observers as one of the leading factors behind soaring home prices in Toronto and Vancouver, as well as their surrounding areas.
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