The lack of housing supply, especially in the Greater Toronto Area, will aggravate Canadian home price growth this year, amid already acute pressure from investors and speculators.
Coming off the heels of at least nine consecutive months of sales growth on a national level, it can been seen that the moderating effect of mortgage stress testing first implemented in 2018 was not sufficient to prevent demand from overtaking inventory, according to a recent analysis by real estate information portal Zoocasa.
“While factors such as foreign and domestic investment have also contributed to too-hot-to-handle price growth, that there have been too few homes to satiate demand, particularly in the GTA markets, set the stage for bidding wars and a stratospheric rise in home values over the course of 2016,” Zoocasa explained.
“That infamously led to the implementation of the Ontario Fair Housing Plan, which included a number of measures including a foreign buyers’ tax and rent controls, to cool the demand end of the market.”
And while such measures helped cut down demand noticeably, “Canadian real estate as a whole could be considered a sellers’ market in November, with a sales-to-new-listings ratio of 66.3%, as new supply shrank by -2.7% year-over-year.”
The total months of inventory are also at their lowest since 2007, at a mere 4.7 months.
Toronto’s consistently intense levels of demand are a stark microcosm of the national situation, if statements from the city’s real estate board are any indication.
“Strong population growth in the GTA coupled with declining negotiated mortgage rates resulted in sales accounting for a greater share of listings in November and throughout the second half of 2019,” TREB chief market analyst Jason Mercer said.
By the end of last year, the sales-to-new-listings ration in the region stood at an alarming 81%.
“Increased competition between buyers has resulted in an acceleration in price growth. Expect the rate of price growth to increase further if we see no relief on the listings supply front.”