Toronto New Home Prices Show Biggest 12-Month Drop In 22 Years
Has the bubble burst? New data from StatsCan might make you think it has.
According to a new report from Statistics Canada, Toronto new home prices fell 1.5 per cent year-over-year in October. Though that may not seem like a big drop, it is the fast recorded fall in over two decades.
Though StatsCan only recorded only a 0.1 per cent drop between September and October, it’s the pace of yearly drop that’s concerning. Bloomberg reports this decline occurred at a faster rate than we’ve seen since 1996.
And the pace of newly constructed single-family homes has dropped too. Between October 2017 and October 2018, construction of single-family homes dropped 40.3 per cent.
Across the country, the new home price index was up just 0.1 per cent year-over-year. The increase was the smallest recorded since January 2010.
Government measures implemented at the start of 2018 may be partly responsible for these changes. 2018 saw five interest rate hikes and the implementation of the mortgage stress test which was introduced by the government to cool overly hot markets in Toronto and Vancouver.
Prior to the mortgage policy changes, home prices increased at an annual pace of 4 per cent. It should be noted that while the index includes single-family, semi-detached and row houses, it doesn’t capture condominiums which continue to do well in Toronto.