Piling listings outpace buyer demand, pushing prices down
Toronto home prices saw their first decline in four months as buyers held back while more properties entered the market.
The seasonally adjusted benchmark price fell for the first time since January, down 0.4% in May to $1.08 million, according to the Toronto Regional Real Estate Board (TRREB). Home sales also fell for the fourth consecutive month even as new listings increased.
“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year,” said TRREB chief market analyst Jason Mercer. “We have seen selling prices adjust to mitigate the impact of higher mortgage rates. Affordability is expected to improve further as borrowing costs trend lower.”
The price decline comes as overall inflation eases, leading to speculation that the Bank of Canada may cut interest rates as soon as this week's policy meeting on Wednesday.
Sales in Toronto fell 1.8% seasonally adjusted in May to 5,167 transactions, while new listings rose 2.6% to over 13,000. Nearly 22,000 properties are currently listed, an 83% annual increase, putting downward pressure on prices. The benchmark home cost is down 3.5% from last May.
"Affordability is expected to improve further as borrowing costs trend lower," Mercer said. “However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases.”
"In order to have an affordable and livable region over the long term, we need to see a coordinated effort from all levels of government to alleviate our current housing deficit and to provide housing for new population moving forward," TRREB CEO John DiMichele commented. “On top of this, governments need to ensure the delivery of infrastructure to support our growing population.”
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