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There’s been no let-up in Toronto’s hot real estate market and home prices continue to be sky high, according to statistics released on Wednesday.
- The Toronto Real Estate Board says there were 12,794 residential transactions through its members in June — 7.5 per cent more than the same month last year.
- The group’s home price index was up 16 per cent from last year, amid steady demand and fewer new listings.
- The number of new listings fell to 16,980 from 17,659 in June 2015 and from 17,412 in May of this year.
- The average sale price in the Greater Toronto Area was $746,546 last month, up from $639,309 in June 2015 and up from $734,924 in May.
- In the City of Toronto itself, the average price of detached houses was nearly $1.26 million — up 19.6 per cent from a year ago but down slightly from the May average price of $1.28 million.
2. Vancouver housing stats are released
Canada’s most expensive market for homes shows no signs of slowing down as June results even outpaced a torrid May. The Real Estate Board of Greater Vancouver said it was the best June on record for existing home sales and price increases are escalating on a year over year basis…
- The board said there were 4,400 property sales in in June, 2016 — a 0.6 per cent increase from a year ago but a 7.7 drop from a month ago.
- June sales were still 28.1 per cent above the 10-year average for the month.
- The board’s MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver rose 32.1 per cent from a year ago to $917,800. The index rose 3.2 per cent from just May.
- New listings for detached, attached and apartment properties in the metro area reached 5,875 last month for a 1.2 per cent from a year ago and 6.6 per cent increase from May.
- The total number of properties listed for sale in Metro Vancouver at the end of June was 7,812, down 35.9 per cent from a year ago but rose 1.1 per cent from May.
- The sales-to-active listings ratio for June was 56.3 per cent, which the board said is a seller’s market. The ratio was the lowest it has been since February.
- The benchmark price for a detached home was $1,561,500 in June, an increase of 38.7 per cent from a year earlier.
- The increase occurred as sales dropped 18.6 per cent during the period.
- In the apartment sector, prices rose 25.3 per cent in June from a year ago as sales jumped 18.8 per cent during the same period.
3. Bank watchdog to keep closer watch over mortgages
Concerned over rising home prices and record household debt levels, Canada’s banking watchdog has issued a stern warning to the country’s financial institutions.
In a rare open letter, the Office of the Superintendent of Financial Institutions sent a clear message to the mortgage industry on Thursday that it will “place an even greater emphasis” on confirming that lenders are paying close attention to key areas of the market.
4. Municipalities must shoulder some blame for affordable housing crisis
Some of the blame for the so-called affordable housing crisis in Canadian cities can be attributed to supply-side issues caused by municipal restrictions, according to a new study out Thursday. The 52-page report by the Fraser Institute out Thursday suggests municipal regulation of residential development has restricted housing supply, encouraging the growth of prices and distorting local economies. The report, which studied metro markets in Toronto, Vancouver and Calgary, comes on the heels of new data that show two of those markets are getting hotter. While Calgary detached home prices continue to slump on a year-over-year basis, detached home prices in Metro Vancouver rose almost 39 per cent in June compared to a year earlier and increased almost 20 per cent in Metro Toronto in the same period…
5. Analyzing the potential impact of Brexit on Canadian Real Estate
Toronto and Vancouver are being pitched as relatively safe property havens now that London, for years one of the world’s leading targets of foreign capital, suddenly looks a lot riskier. Blame it on Brexit.
- In the past decade, central London saw the biggest increase in residential property prices of any major city as the favoured destination for global capital seeking a stable sanctuary.
- Nearly three out of every four newly built homes in 2013 were bought by foreign buyers, half of them from Asia, according to Knight Frank LLP.
- Similarly on the commercial side, 70 per cent of central London purchases were by foreigners in 2015.
- Britain’s decision to leave the European Union may not necessarily change that overnight. The pound’s record plunge could attract buyers seeking a bargain, but the vote may ironically bring more predictability to Britain, but export uncertainty to the rest of Europe.
- But with China among Asia’s most vulnerable economies to Brexit risk, there could be an even greater appetite from mainland buyers for North American assets
- A record $18.3-billion flowed out of China globally in 2014 and nearly half of that went to just three markets: London, Manhattan and Sydney
- That flow has since diversified to other markets with Canada increasingly a beneficiary.
- Brexit is also likely to cause the Bank of Canada to hold interest rates lower for longer, which will stoke demand in the residential market.
- Any additional trickle of demand into Vancouver and Toronto could prove a headache for Canadian policy makers seeking to damp record high home prices.
- In recent weeks, the International Monetary Fund, Organization of Economic Co-operation and Development and Bank of Canada have all flagged the increasing risk of a potential correction.
6. Redefining Luxury in Toronto and Vancouver
A record number of properties are selling for at least $1-million in Toronto and Vancouver, raising the threshold for what constitutes luxury.
- The average price in Greater Vancouver for detached houses sold last month reached $1.77-million, compared with $892,747 in Greater Toronto, according to the regional real estate boards.
- It makes sense to reclassify luxury to mean roughly $3.6-million in the Vancouver region and $1.8-million in Greater Toronto, and even higher prices in posh neighbourhoods within city limits
- In the Greater Toronto Area, 10,172 residential sales qualified for the $1-million club in the first six months of 2016, a 65-per-cent surge from the same period of 2015.
- The City of Vancouver – a smaller housing market than its Toronto counterpart – saw 439 sales for at least $4-million in the first six months of this year, or double the 219 transactions from the same period in 2015.
- Sales in the city of Toronto in the $4-million-plus category climbed 63 per cent to 103 sales.
7. Foreign buyers make international headlines
Over the past year, the price of a single family house in Vancouver increased by an incredible 30%, to an average of $1.4m. It’s just the latest, most dramatic jump in an already dramatic long-term trend that has turned the beautiful but unassuming Canadian city into one of the world’s least affordable, with a housing price-to-income ratio of 10.8. That’s third after Hong Kong and Sydney, and well ahead of London, which ranks eighth at 8.5.
A total of 3.3 per cent of B.C. real estate transactions made over a 19- day period in June were made by foreign buyers, according to new data released by the government showing the impact of offshore buyers in the province’s overheated real estate market. The information comes three weeks after a new requirement took effect on the property transfer tax form that compels buyers to disclose whether they are a permanent resident or citizen of Canada. If not, they are compelled to fill in the country of citizenship. This is the first time ever the province has tracked the country of origin for buyers.
Driving the rise is an unprecedented flood of foreign capital, mainly from China. At a recent real estate conference in Asia, the 3.3 per cent figure was laughed at. In spite of spiking inequality, policymakers have been slow to acknowledge the problem of foreign capital. Public debate about Vancouver’s affordability crisis has, until recently, been surprisingly circumspect – due in no small part to a very Canadian discomfort with talking about race.
Author
Gavin Davidson
Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.