Canada’s priciest housing markets saw their worst year for sales in at least a decade as higher borrowing costs and stricter mortgage rules hit home.
Sales in the Toronto region fell 16 per cent to 77,426 transactions in 2018 while the average price fell 4.3 per cent to $787,300, the Toronto Real Estate Board reported Friday. That’s the worst year for sales in Canada’s biggest city since 2008. In Vancouver, full-year sales fell 32 per cent to 24,619, the lowest since 2000 and 25 per cent below the 10-year average.
“Higher borrowing costs coupled with the new mortgage stress test certainly prompted some households to temporarily move to the sidelines to reassess their housing options,” Garry Bhaura, president of the Toronto Real Estate Board, said in a statement.
Sales in both cities took a dive in the first half of 2018 after the federal government imposed tougher qualifying rules for mortgages. Vancouver sales continued to suffer even while Toronto began to recover in the second half, as the British Columbia government introduced more measures to deter speculation.
In December, Toronto sales fell 23 per cent to 3,781 from the same month in 2017. The drop was likely exaggerated by buyers rushing in last year to beat the new rules. Vancouver had the weakest December for sales in a decade, falling 47 per cent to 1,072 transactions from a year earlier.
Homeowners staying put rather than attempting to cash on previous gains appear to be a factor in the decline in sales in Toronto with new listings down 13 per cent for the year and 32 per cent in December.
The benchmark price, which measures the value of a typical home, rose 3 per cent to $764,200 in December from a year ago in Toronto. The condo sector performed strongest, with benchmark prices jumping 9 per cent while the price of a detached home was little changed at $907,900. Vancouver benchmark home prices dropped to $1.03 million in December, down 2.7 per cent from a year earlier.