Rising interest rates continue to hit the real estate market across the Greater Toronto Area as home sales, listings and the composite benchmark price all declined both year over year and month over month in November.
According to monthly figures released by the Toronto Regional Real Estate Board on Tuesday, GTA homes sales slipped by 49 per cent over last November to 4,544 units while month-over-month sales declined as well.
New listings in November also tumbled, down 11.6 per cent to 8,880 from 10,044 last year. Meanwhile, the composite benchmark price fell 5.5 per cent to $1,089,800 from $1,163,323 in November 2021. Average price of all home types sold fell 7.2 per cent to $1,079,395 from $1,162,564 over the same time period.
“Increased borrowing costs represent a short-term shock to the housing market,” TRREB president Kevin Crigger said in the report. “Over the medium- to long-term, the demand for ownership housing will pick up strongly. This is because a huge share of record immigration will be pointed at the GTA and the Greater Golden Horseshoe (GGH) in the coming years, and all of these people will require a place to live, with the majority looking to buy. The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth.”
Market activity has fallen dramatically since the Bank of Canada began raising interest rates in March. However, TRREB believes that immigration will force the hands of those who have chosen to stay on the sidelines.
In an interview, TRREB’s chief market analyst Jason Mercer said that immigrant households tend to focus on becoming homeowners. As a result, he sees long-term demand as Canada opens its borders to a record number of immigrants in the coming years.
“If you think about the long-term demand for housing, whether you’re talking about ownership housing or rental housing, the Greater Golden Horseshoe and certainly the GTA is the single greatest beneficiary of immigration in Canada,” Mercer said.
That suggests competition in the housing market will compel buyers to return to the market despite steep interest rates.
TRREB’s data for November showed that semi-detached homes have been hit the hardest with an average price decline of 13.9 per cent year over year, with Halton Region claiming the title of the largest decline across all home types at 11.18 per cent over the same time period.
The average price of a condominium dipped in November by 0.9 per cent after outperforming all other housing types in October.
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