Real-estate activity slowed in the Toronto area in March, but home prices continued to climb, defying — at least for now — views that this hot housing market is flaming out.
Average selling prices rose 3.8%, to 519,879 Canadian dollars ($512,700), in March from a year earlier, the Toronto Real Estate Board said in a report Wednesday. Average home prices for the first quarter, meanwhile, climbed 3.2% year-over-year.
Sales activity dropped 17% in March from the year earlier
— the second double-digit drop in two months — as the market reacted to more stringent mortgage restrictions imposed last summer by the Canadian government, said Jason Mercer, senior manager of market analysis at TREB.
It was the fourth round of new restrictions in as many years, as the government sought to hold the reins on the important segment of the economy. More recently, Canadian Finance Minister Jim Flaherty has admonished banks for dropping mortgage rates, cautioning about the potential impact of launching another mortgage war that could turn up the heat again on house prices.
Despite the government’s efforts, real-estate prices in the wider Toronto area have continued to edge upward.
And amid the current “tight market conditions,” particularly in the so-called low-rise segment of the market — single-family houses, semi-detached ones and townhouses — that’s likely to continue, Mr. Mercer said. The Toronto area real-estate market is below the long-term average in supply, with about 2.7 months of inventory on the market. The long-term average is between 3 and 3.5 months, including condominiums, he said.
Canadian policymakers and economists have been keeping close tabs on real-estate action in Canada’s biggest metropolitan area, where a building and buying boom has continued since before the global recession. The condominium segment of this market been singled out as of particular concern.
TREB is forecasting slower activity and modestly higher prices throughout 2013.
Source: Wall Street Journal