GTA home prices cap tumultuous year with meagre gain in December

TheGlobeAndMail.com
Jan. 4, 2018
Janet McFarland

Toronto area home prices ended 2017 with a gain of less than 1 per cent from a year earlier, wrapping up a tumultuous year marked by an early boom followed by a sharp correction in the wake of government policy intervention.

The Toronto Real Estate Board reported home prices in the Greater Toronto Area averaged $735,021 in December, up just 0.7 per cent from $730,124 in December, 2016.

TREB said the average price for all homes sold over the course of 2017 was $822,681, a gain of 12.7 per cent compared to the average price of $729,837 for all homes sold during all of 2016.

That healthy gain was due to a boom in the first four months of 2017, which saw Toronto home prices climb to record levels. By April, prices were 25 per cent higher than the same month in 2016. Prices began falling in May, however, after the Ontario government announced a package of measures to cool the housing market, including a new foreign buyer's tax. At their lowest in August, average GTA home prices were down 20.5 per cent from April's peak.

Since August, the GTA has seen a shaky recovery. Average prices rose in September and October on a monthly basis from August's low, but dipped in November on a monthly basis and fell again in December, dropping 3.5 per cent over November's average. The number of homes sold in December fell 7 per cent compared to December, 2016, as new listings climbed by 52 per cent on a year-over-year basis.

TREB president Tim Syrianos said much of the sales volatility in 2017 was brought about by government policy decisions, and the impact is expected continue with tougher new mortgage stress-testing rules taking effect Jan. 1.

"Looking forward, government policy could continue to influence consumer behaviour in 2018, as changes to federal mortgage lending guidelines come into effect," Mr. Syrianos said in a statement.

TREB said it will report more on its 2018 outlook on Jan. 30, when it will release findings from a new poll on consumer buying intentions and new research on housing supply options.

Jason Mercer, TREB's director of market analysis, said home price growth in the second half of 2017 varied significantly depending on the market segment. Detached houses, which are most expensive on average, saw the slowest pace of growth, while the condominium sector saw double-digit growth as condos accounted for a growing share of all transactions

The price of detached houses in particular remained weak in December after sales fell almost 14 per cent compared to December, 2016. Detached home prices fell 2.5 per cent in December compared to a year earlier, averaging $989,870 in the month.

Prices held up best in the condominium sector, rising more than 14 per cent in 2017 to an average of $503,968 in December. But total number of condo units sold in December fell 9.5 per cent compared to a year earlier as supply tightened.

Based on TREB's MLS Home Price Index, which corrects for the changing mix of homes sold each month, prices in December were up 7.2 per cent from December, 2016.

Among the major regions in the GTA, average prices climbed most in the City of Toronto in 2017, up 11.7 per cent in December compared to a year earlier, based on the MLS Home Price Index. Much of Toronto's gain was driven by a 23-per-cent increase in condominium prices.

York Region north of Toronto was hardest hit in 2017, with prices down 0.04 per cent in December compared to the same month in 2016, based on the MLS Home Price Index.

Prices were up 7.7 per cent in Peel Region west of Toronto, 6.7 per cent in Halton Region and 6.7 per cent in Durham Region east of Toronto on a year-over-year basis.