Housing market activity in Toronto at 13-year low, slowdown nears, says new RBC report
A new report from RBC expects a vicious intensification of the Canadian housing market slowdown, with high-priced areas like Toronto and Vancouver most at risk.
According to the report, early data suggests that rising interest rates have taken their toll last month, with Toronto facing a downturn in activity that report author Robert Hogue calls “one of the depths of the last half-century”.
“Prices are sliding rapidly,” he wrote. “And the exuberance that permeated these markets earlier this year is being replaced by fear.”
According to a July price index from the Toronto Regional Real Estate Board, the City of Toronto has seen a 12.93% increase in house prices since last year, with winter 2021 news noting even as the expected collapse of the pandemic did not occur, but rather exceeded the total sales of the previous year (2020).
However, RBC warns that with declining activity and expectations of further interest rate hikes from the Bank of Canada – which will increase borrowing costs and reduce purchasing power – buyers will be pushed out of the way, which could “chill” the market in the coming months. , before creating a domino effect where more and more buyers are taking a wait-and-see approach to consider how the situation may unfold.
Notably, Toronto, which the report says has “overstretched affordability,” could be most at risk, especially after outsized price gains during the pandemic.
The RBC report also commented specifically on the winter frenzy in the Toronto market last year, with their aggregate data indicating a nearly 50% decline in home resales in the city since last year, and a smaller decline (4.1%) of the total amount. new announcements made available.
This is the lowest activity in 13 years, excluding the April 2020 pandemic lockdown, according to the report.
“We expect buyers to remain on the defensive in the coming months as they deal with rising interest rates and poor affordability,” Hogue wrote. “We see them able to secure further price concessions, particularly in the 905 belt where property values have soared during the pandemic.”
“City of Toronto condos will likely remain relatively more resilient.”