Sales of single-family detached houses obtaining prices of at the least$ 1-million have almost doubled this year in 2017 in the Greater Toronto Area, as economists conjure the possibility of a real estate bubble.
The GTA recorded 2,876 sale of detached properties of $ 1 million or more in January and February, 2017, compared with 1,548 in the first two months of 2016, a new study by Sotheby’s International Realty Canada shows.
Fierce competition is common amid great demand and a shrinking number of monthly listings, said Brad Henderson, the chief executive officer of Sotheby’s in Canada.” There are sypply and demand issues in the GTA ,” he said in an interview.
While some industry observers argue that foreign buyer are playing an increasingly influential role in the GTA, Mr. Henderson said the bulk of housing demand is from Canadian citizens or permanent residents who have been emboldened by low interest rates and a healthy economy.
He suggested that governments co-ordinate a broad approach to control runaway prices, including targeting speculators and introducing measures to boost supply.” Just reshaping demand isn’t going to get us to where we want to be.
A series of programs is needed to help the market return to a balance between supply and demand ,” Mr. Henderson said.
Economists forecast that last year’s price upsurge in the GTA will continue throughout 2017.
“The indication is stacking up that the GTA market has been divorcing from economic fundamentals since early 2016 ,” said studies and research note this week by Toronto-Dominion Bank chief economist Beata Caranci and her colleagues, economist Diana Petramala and economic analyst Katherine Judge.
“Having a debate on whether there’s a housing bubble is a distraction, since this tends to be confirmed only retrospectively. What we can say is that when comparing this housing cycles to previous ones that lack a happy ending, Toronto appears to be moving in that direction,” they said.
They predict that GTA prices for various housing forms could go up another 20 per cent this year, after rising 17 per cent in 2016.
Last week, Bank of Montreal chief economist Douglas Porter issued studies and research note under the headline “Toronto’s torrid housing: Who wants to be a millionaire?”
Mr. Porter wrote that “after peaking in 1989, it took Toronto home prices nearly two decades to amply recover their loss in real terms in the ensuing collapse of the bubble and slow convalescence.”
Mr. Porter has argued that a reasonable starting point to cool off today’s “ridiculous” GTA house costs would be for the Ontario government to start taxing foreign buyers.
According to data from the Toronto Real Estate Board, the price of detached houses sold last month averaged a record $1.21 -million in the GTA and $1.57 -million in the city of Toronto.
Luxury listings are being snapped up. The analysis by Sotheby’s shows there were 62 detached houses that sold for at the least$ 4-million in the GTA in January and February, 2017, up 158 per cent from the 24 sales during the first two months of 2016.
The GTA’s housing boom contrasts sharply with the sales slowdown in the Vancouver region. The metropolis of Vancouver recorded 296 sale of detached houses for at least $1 million in the first two months of 2017, down 56 per cent from the 680 sales in the same period of 2016, Sotheby’s said.
The price of detached properties sold last month within the city of Vancouver averaged $2.57 -million, down 5 per cent of the members from a year earlier, according to multiple listing service data. In Greater Vancouver, the average price for detached houses slipped to $1.76 -million in February, down three per cent from the same month in 2016. Median costs for condos and townhomes, however, are climbing.
Source: Globe And Mail
