Toronto House Prices rise along with sales

2023.06.02 11:53

Toronto House Prices rise along with sales

By Ray Johnson

Budrigannews.com – The Greater Toronto Area (GTA) saw a sharp increase in sales and an increase in home prices in May, both of which add to the evidence that the housing market is recovering from a year of decline and may support further rate hikes by the Bank of Canada.

According to data released on Friday by the Toronto Regional Real Estate Board (TRREB), the average price of a home in the Greater Toronto Area increased by 3.7% in May to nearly C$1.2 million (892,193).

It was the fourth month in a row with gains, and the overall market has also improved in recent months.

Inflation could be fueled by signs that the housing market is recovering. Since January, the BoC has maintained its policy rate at a 15-year high of 4.50%, but it says it is prepared to tighten further to bring inflation back to its target of 2%.

The probability of the central bank raising rates when it makes its policy decision on Wednesday is about 40%, according to the money markets.

The average home price decreased year over year, but the rate of decline slowed to 1.2% from 7.8% in April. The typical cost was 10.3% underneath the February 2022 pinnacle.

In the meantime, developers’ higher borrowing costs have slowed down residential construction in Canada, which may prevent the government from implementing its plans to reduce the housing shortage.

According to TRREB chief market analyst Jason Mercer, “the supply of listings hasn’t kept up with sales, so we have seen upward pressure on selling prices during the spring.”

New postings fell 18.7% year-over-year in May. Conversely, deals rose 24.7% on a yearly premise and were up 20% from April.

According to Mercer, “the demand for ownership housing has significantly increased in recent months.” In the face of higher borrowing costs, many homebuyers have adjusted their housing requirements and are returning to the market.”