Canada’s three largest housing markets have undergone “considerable softening” just since May, largely thanks to the condo boom, according to the Teranet-National Bank House Price Index for July.
Toronto resale home prices are still gaining ground, but at less than half the 9.2 per cent year over year gain they racked up in July, says Marc Pinsonneault, the senior economist for National Bank of Canada responsible for the monthly look at house price gains across Canada which was released Wednesday.
Slowing demand, a better supply of single-family homes for sale and a “historically high” number of resale condos on the market have all helped slow the seasonally adjusted price growth in June and July to about 0.7 per cent, says Pinsonneault.
That means homeowners may see annual house growth decline to about 4 per cent going forward, says Pinsonneault.
“I don’t think the 9.2 per cent (annual price gain) is something we’re going to see a few months from now. I certainly expect prices to slow down and maybe even correct a bit.”
That could be good news for buyers after the past two to three years of such high demand and low supply of single family homes, in particular, that bidding wars have even broken out in suburban neighbourhoods, driving prices into the stratosphere.
Toronto is among just four major markets where house price growth exceeded the year over year national gains of 4.8 per cent in July. The others were Winnipeg (up 7.4 per cent), Hamilton (5.9 per cent) and Halifax (5.4 per cent.)
While Montreal saw year over year gains of 4.2 per cent and Vancouver saw a modest year over year gain in July of 1.6 per cent, that once red-hot market has seen a substantial decline in sales and prices just in the last few months, says Pinsonneault.
The key to an “orderly correction” in the Toronto market — which saw a record 28,000 condo sales last year, a rush of new projects early this year and now has a record number of unsold new condos on the market — is for developers “to evaluate the situation correctly.”
“If developers slow the pace (of new launches and construction) then the condos that could really harm the market won’t be there. There’s still time,” to delay or cancel some projects, he added.
In fact, that is already happening. At least two Toronto condo projects have been cancelled or delayed indefinitely and developers have become more cautious.
The biggest barometer of where the condo market is heading could turn out to be Tridel’s 75-storey Ten York project, slated for Toronto’s waterfront area.
The 795-unit tower was supposed to launch last spring, but that’s been delayed until late September. The delay is only because of design and approval issues, Tridel vice-president Jim Ritchie has said.