by Umar Farooq
Home sales across the Canada hit a record high in the month of March, mainly due to transactions in the fiercely hot market of Toronto, further fuelling concerns about the city’s real estate sector. The CREA report added to evidence of booming sales in Toronto, the nation’s largest market, where bidding wars and soaring prices have sparked concern about a bubble.
The monthly CREA statistics came Tuesday as the provincial and federal finance ministers and Toronto Mayor John Tory met to discuss the imposition of potentially using similar taxes to cool Toronto’s increasingly unaffordable property market. The actual national average price for homes sold in March this year was $548,517, up 8.2 per cent from a year ago. Excluding the Toronto and Vancouver areas, the average price was $389,726.
CREA, an industry group representing realtors, reiterated its concern that further moves by the government to rein in the market could have a negative impact on other cities, which are more moderate than Toronto. “Because housing market balance varies by location, federal or provincial policy measures aimed at cooling demand in Toronto risk destabilizing housing markets elsewhere,” CREA chief economist Gregory Klump said in a statement.
CREA cautioned politicians against destabilizing other Canadian markets in any attempt to temper Toronto prices. “If Toronto is the only hot market in Canada, you don’t want to be throwing cold water on everybody,” said Cathcart. He said the city’s “prices are as tight as they’ve ever been.”
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“The number of Canadian home sales hit a record high last month with the sizzling Toronto-area market pulling up the rest of the country, according to the Canadian Real Estate Association (CREA).” Toronto always swings the biggest bat in Canada, but even more so lately,” said CREA senior economist Shawn Cathcart on Tuesday. Non-seasonally adjusted Canadian sales were up 6.6 per cent year over year in March, with Toronto climbing 17 per cent in that period. That offset a 31.5 per cent decline in Vancouver sales, the latest drop since the introduction of a foreign investor tax and vacant homes taxes last year.” thestar
The strong Toronto housing market is driving up household debt, said Doug Porter, chief economist for BMO Financial Group. That means that the Bank of Canada is coming under increasing pressure to raise interest rates. If the Bank did that, it would take effect nationwide – even for someone in Saskatoon.
Canadian government has already moved several times in the last five years to tighten mortgage lending rules to prevent homebuyers from taking on too much debt to get into the housing market, but the measures have not stopped fears of a bubble.