Photo: James Bombales
Ontario’s real estate market closed out 2017 with strong sales numbers. But according to two economists, that performance isn’t likely to continue into the new year.
“Existing home sales rose 3 per cent month-over-month in December,” writes TD senior economist Michael Dolega and economist Rishi Sondhi in a recent note. “[But] going forward, the improvement in Ontario’s market could take a breather, with the initiation of [new mortgage rules] likely to weigh on activity in the GTA.”
Ontario’s sales gain in December was largely due to a 8 per cent bump in the GTA market. The new mortgage stress test that came into effect on January 1 seems likely to dampen sales for the foreseeable future.
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Just two weeks into the new year, online real estate website Zoocasa has reported that the GTA has seen a 21 per cent year-over-year drop in condo sales, and a 20 per cent drop in detached home sales.
“We did anticipate that the GTA market would be off to a slower start in 2018,” Zoocasa managing editor Penelope Graham told BuzzBuzzNews. “With the new mortgage rules, you have people who are hesitant to buy or to list, until things settle down.”
Dolega and Sondhi write that next month will prove the first true test of the Ontario market under the new rules.
“Next month’s [sales numbers] report will be all the more closely scrutinized for the health of the market, amidst the newly implemented [mortgage rules],” they write.
But while the GTA will likely see lower sales numbers for the first quarter of 2018, not every Ontario market is set to cool. According to Scotiabank VP and deputy chief economist Brett House, buyers priced out of Toronto may make their way to other cheaper pastures.
“There’s likely going to be spillover in [other Ontario markets] as affordability becomes increasingly strained in markets like Toronto,” House told BuzzBuzzNews. “Hamilton and Oshawa among others.”