Supply Concerns Grow As Sales Remain Strong in August in GTA: TREB
Property sales and prices continued their upward trend in August across the Greater Toronto Area indicating a hot market. It seems that the market has gotten over the effects of the measures taken last year to prevent the market from overheating.
Toronto Real Estate Board (TREB) data revealed that home sales increased by 13.4% year over year, with a total of 7711 unit sales in August. However, the supply decreased by 3%, stressing the short supply market further and driving prices higher. The average prices increased by 3.6% over last year to CAD 792,611, along with 4.9% growth on the MLS Home Price Index, which measures the overall value of the homes sold.
Demand Has Continuously Increased
TREB president Michael Collins stated “GTA-wide sales were up on a year-over-year basis for all major market segments, with annual rates of sales growth strongest for low-rise home types including detached houses. This reflects the fact that demand for more expensive home types was very low in 2018 and has rebounded to a certain degree in 2019, albeit not back to the record levels experienced in 2016 and the first quarter of 2017. The OSFI mortgage stress test continues to keep some would-be home buyers on the sidelines.”
Lack of Supply Continues to Worry
The tightening of supply in the market is causing concern that prices could resume the ferocious upward trajectory that defined the 2016-2017 market, especially as new housing creation continued to fall short. TREB data revealed that year-to-year sales had well outpaced the supply of new listings, which was putting pressure on home buyers. The sales-to-new-listings ratio (SNLR) in GTA was 65%, making it a seller’s market.
The city of Toronto saw 2553 home sales last month, a 5.1% increase, whereas the supply of new listings stayed mostly flat with a decrease of 0.6%. The average home price rose 4.2% to CAD 818,715; the overall SNLR in the city was 68%.
“This year’s market through August has been characterized by receding listings and increasing sales relative to 2018,” stated Jason Mercer, TREB’s chief market analyst. “Competition between buyers has increased, which has led to stronger annual rates of price growth, most notably during this past spring and summer. Right now, the overall pace of price growth is moderate. However, if demand for ownership housing continues to increase relative to the supply of listings, the annual rate of price growth will accelerate further.” He added “ This underpins the importance of solving this region’s housing supply issues, which will go a long way to insuring a sustainable pace of price growth over long term.”
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