The Canadian housing market has been slowly warming up for months, led by consecutive month-over-month sales gains in the GTA. But will the city continue to perform well heading into the fall, or be held back by policy headwinds?

While the market seems to have largely adjusted to the effects of the Ontario government’s Fair Housing Plan, and new mortgage rules introduced in January, it still faces the cooling prospect of another interest rate hike in October.

The Bank of Canada hiked the overnight rate to 1.50 per cent in July, and an additional hike could keep would-be home buyers concerned about higher mortgage payments on the sidelines this fall.

For a closer look at what to expect in the coming months, Livabl has rounded up latest industry commentary, to keep you in the know.

Sales are up across property types

Home sales were up year-over-year for every GTA property type in the first two weeks of September, according to a report from Zoocasa released this week. Detached home sales were up 9 per cent, while condo sales rose 8 per cent and semi-detached sales jumped 5 per cent.

“That sales are up year-over-year is an optimistic sign that some of the fallout from housing and mortgage policies this year and last are starting to subside,” Zoocasa managing editor Penelope Graham told Livabl. “Sellers are certainly active, as there’s been an influx of new listings hitting the market.”

Graham noted that the market is nowhere close to hitting the levels achieved in spring 2017, but she says it’s clear that the psychological impact of the stress test has subsided, and that sellers have less anxiety around listing their properties. Still, some buyers are being kept on the sidelines by the new policy.

“The tougher mortgage qualifications continue to challenge borrowers and limit the budgets they’re working with heading into the fall,” shared Graham. “Overall, the market is in healthy, balanced territory, and that’s going to appeal to motivated buyers.”

It’ll keep warming up — slowly

GTA home sales and prices have been on an upward trajectory for the past few months, a trend that the Canadian Real Estate Association predicts will continue into the fall, albeit at a moderate pace.

According to Royal LePage Signature Realty sales representative Cam Woolfrey, a relative lack of supply combined with a record level of demand should continue to push up prices.

“When you starting looking at 10-year averages, I think prices are heading in a more healthy direction, as opposed to the large peaks and deep valleys we’ve seen over the last year or so,” he told Livabl. “In markets like Toronto, where there’s still strong demand, prices will continue to move upwards, but at a more moderate pace.”

Affordability pressures remain

As prices continue to climb, should GTA residents brace for housing affordability to continue to worsen? According to one economist, the answer might be yes.

“It’s clear that housing markets are moving past the [new mortgage stress test] induced weakness earlier in the year. Questions now centre on the path of the recovery going forward,” wrote TD economist Rishi Sondhi earlier this week. “Our view is that sales and prices will continue to grow…this is particularly true for more expensive markets in Ontario and B.C. where affordability pressures are acute.”

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