Speaking to CP24
, Toronto Real Estate Board president Larry Cerqua noted that consumers should brace for more price growth—but not because of foreign money, which is still playing a relatively minor role in the Toronto market at present.
“If it does increase, it’s usually because of the fact that there’s no supply and yet the demand is there. You can’t make land, you can’t build out, so you’ve got to build up,” Cerqua explained.
An increasing number of consumers might also begin preferring housing types such as condominiums and townhouses over single detached properties.
“It’s a possibility. People want to get into the market, one way or another.”
Furthermore, buyers have proven sensitive to recent changes to federal mortgage rules. The regulatory changes mean that they now need a certain level of liquidity to enter home ownership, “but they are also being creative about it.”
“New buyers are coming in with the perspective of, ‘We want to get into the marketplace, whatever it takes.’ If it means teaming up with a family member, they will go for it,” Cerqua said, alluding to the growing popularity of co-ownership in the city.
Bank of Nova Scotia senior economist Adrienne Warren recently warned that the combination of decreased affordability and tighter rules will spell trouble for the Toronto market in the near future.
“Given increasingly stretched affordability, we expect the latest tightening in mortgage qualifying rules will lead to a cooling in GTA housing demand over the coming year,” Warren said.
“At the same time, severely constrained supply - the ratio of sales to new listings climbed to a seven-year high in September - will likely keep upward pressure on prices in the near term.”
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The latest Teranet-National Bank home price index revealed that the cost of owning a home in Toronto last month increased by an unprecedented 17.4 per cent year-over-year, evidence of the high desirability that Ontario’s capital continues to exhibit.