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Early signs show Toronto real estate market may be cooling

The Toronto real estate market seems to be cooling somewhat, and it is likely related to measures to control prices in the city by the Ontario government.

Garry Marr of the Financial Post wrot that early April data from the Toronto Real Estate Board (TREB) shows reduced sales from the period before the government announcement.

On April 20, the Ontario government announced a 15 per cent tax for non-residents purchasing property in the province. Many buyers started reacting to the move before the announcement happened, and buyers still seem to be waiting to see how the changes affect housing resale prices.

“Data from TREB’s site indicates that between April 21 and 27–after the provincial changes that also included tougher rent control rules and the ability to tax vacant homes in the city of Toronto –that 2,486 properties changed hands over the week, 1,702 freehold and 784 condominiums. That was up from the 2,094 properties–1,370 freehold and 724 condominiums–that changed hands between April 14 and 20.”

“Looking back to the week from April 7 to 13, there were 3,303 sales (2,242 freehold and 1061 condominiums)–essentially meaning the market pulled back sharply. But given such a short-period, which could be heavily influenced by even a change in weather–the preliminary statistics have to be viewed with skepticism.”

As Marr mentioned in his story, the “urgency” of doing something about Toronto’s housing market came after resale prices in the city hit 33 per cent over last year, and average prices of detached homes climbed to $1.78 million over the previous year, which is up 70 per cent, according to TREB data.

“I believe if you look at the next six months, overall activity will be lower than they otherwise would have been,” said Benjamin Tal, deputy chief economist with CIBC. “The results will be lower than otherwise just because of the uncertainty, not the tax. That’s exactly what happened in Vancouver,” he said, following British Columbia changes to impose a 15 per cent tax on foreign buyers last year.