Toronto home sales plunge and prices slide as rising borrowing rates bite

Article content

Toronto home prices slid three per cent in April from the month before as rising interest rates continued to weigh on the housing market.

Article content

The average home price of $1.254 million, though down from March, was up 15 per cent from last year, the Toronto Regional Real Estate Board said Wednesday.

Sales also declined in April, falling 27 per cent from the month before and 41 per cent from last year.

“Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation,” said TRREB president Kevin Crigger in a press release. “Moving forward, it will be interesting to see the balance the Bank of Canada strikes between combatting inflation versus stunting economic growth and related government revenues as we continue to recover from and pay for pandemic-related programs.”

Article content

In its fight against decades-high inflation the Bank of Canada has so far raised its key rate 75 basis points to one per cent. These rate increases have rippled throughout the mortgage market, raising the cost of borrowing.

However, the tight supply of homes is still expected to put some upward pressure on prices compared to last year.

Article content

“Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year,” said TRREB Chief Market Analyst Jason Mercer in a release. “However, in line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month.”

Mercer added that he anticipates there should be enough buyer competition to keep price growth strong compared to 2021, though the pace of growth will start to moderate over the next few months.

The Canada Mortgage and Housing Corporation pointed to a supply issue in its first in a series of reports highlighting the country’s lack of housing supply and its impact on affordability. The report noted that supply was not keeping up with population growth in Canada’s largest cities, particularly in places like Toronto.

• Email: [email protected] | Twitter: StephHughes95