(Bloomberg) -- Canada’s largest housing market showed signs of life in October after months of cooling demand and declining prices, the Toronto Real Estate Board said.
Home sales in Toronto rose about 12 percent from September, an above average move and one that points to “stronger fall market conditions,” the realtor group said Thursday. Transactions were still down 27 percent from a year earlier.
Average prices climbed 2.3 percent to C$780,104 ($606,200) in October from a year earlier, and were up almost 1 percent from September, the second straight monthly gain. That follows a summer where they fell more than 15 percent between May and August after the provincial government introduced new rules to cool things down.
“It appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind," said Jason Mercer, the board’s director of market analysis. The organization said it’s polling consumers about the impact of the regulations, and is speaking with various levels of government to address long-term supply issues.
Benchmark prices, which are weighted to account for differences in home type, fell 0.4 percent from September, the fifth straight monthly decline. Prices in Greater Toronto are down 8.4 percent since May.
The frenzy that drove the average price of a home in Canada’s largest city to almost C$1 million dissipated in May, the month after the provincial government announced policies that included a tax on foreign buyers. Other regulations introduced recently include stress testing for borrowers and tightening access to mortgage insurance for commercial banks.
Sales have dropped on an annual basis every month since May, and price growth slowed from its 2016 double-digit pace, prompting economists and brokers to say the Toronto market was in a correction.
Forecasters at mortgage lenders and the government housing agency expect prices to rebound nationwide in 2018, led by a recovery in Toronto. Canada Mortgage & Housing Corp. said in October it expects “balanced conditions” to enter the market as land constraints drive prices up for the next two years.
The heat in the detached market has shifted to condominiums. In October, average prices for high rise units jumped 22 percent from the prior year to C$523,041, more than any other housing type.
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