Are prospective buyers moving to the sidelines?
The Greater Toronto Area (GTA) new home market has shown considerable deceleration in July as a direct consequence of the Bank of Canada’s rate-hike campaign, according to the latest market report by Altus Group and the Building Industry and Land Development Association.
“Rising interest rates left prospective buyers cautious during what is already typically a quiet month for new home sales,” BILD said.
The BoC’s benchmark interest rate now sits at 5%, its highest level for 22 years as the central bank continues its war on inflation.
Toronto saw a total of 1,190 new home sales in July, which was 18% lower on an annual basis and fully 50% below the region’s 10-year average for the month.
By asset class, condo apartment sales fell by 39% year over year, hovering at 50% below the 10-year average. While single-family home sales posted an impressive 281% annual surge, they were still 51% below the 10-year average.
“The latest interest rate hikes have pushed many buyers to the sidelines again as affordability continues to deteriorate,” said Edward Jegg, research manager at Altus Group.
Toronto's real estate market showed growth in home sales, listings, and prices in July compared to last year, but the momentum has slowed due to higher interest rates. https://t.co/CIYSyqJFV3#mortgagenews #mortgageindustry #homesales #interestrates
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 3, 2023
Housing supply up, sales down in GTA
The region saw its total new home remaining inventory rise to 16,683 units in July, while benchmark prices moderated among condo apartments (down by 9% annually to nearly $1.085 million) and single-family properties (down by 13.5% year over year to roughly $1.673 million).
Dave Wilkes, president and CEO of BILD, said that these developments further underscore the need for the Liberal administration to finally step in with stronger policy responses.
“It is time the federal government recognized its role in helping provinces, municipalities and the industry meet housing demand pressures for which its own policies and federal institutions are in part responsible,” Wilkes said. “We call on the federal government to act with the urgency the situation demands.”
