Home sales in the GTA increased by 16.8% in April, compared to the year before, the Toronto Real Estate Board said Monday.
There were 9,042 residential transactions in the GTA last month, compared with 7,744 in April 2018. When looking at using seasonal adjustment, sales increased 11% from March to April.
The average selling price also increased by 1.9% compared to a year ago, with the average price of a home in the GTA now at $820,148.
“The single-family home segment” was responsible for the increase in home sales, according to TREB. The increase in the average selling price, meanwhile, was spurred by condominiums. Condo prices rose 5.1% in April from the year prior.
“The strong year-over-year growth in sales is obviously a good news story and likely represents some catch-up from a slow start to the year,” said TREB president Garry Bhaura in the board’s news release. “TREB’s sales outlook for 2019 anticipates an increase relative to 2018.”
New listings also increased by 8% from a year ago, but Bhaura said this growth “is not keeping pace with sales,” which means that there’s still more demand than there is supply in the GTA.
“The supply of ownership and rental housing is of paramount importance to the GTA, from the perspective of affordability and economic competitiveness of the region, insofar as talented people are more likely to move to the region if they can easily find housing that meets their needs within their budgets,” said TREB CEO, John DiMichele.
TREB’s chief market analyst, Jason Mercer, also added that the increase in sales, while notable, should be looked at carefully. Even with the increase, Mercer said home sales “remain well-below April levels for much of the past decade.”
This is, in no small part, thanks to stricter mortgage lending rules — namely the OSFI stress test that requires regulated lenders like banks to test whether borrowers can afford their mortgages if interest rates rise. Not only has the test locked many out of the housing market; how it actually works or its direct impact isn’t clear to nearly half of Canadians.
The stress test was responsible for a $15-billion decline in new Canadian mortgages last year, according to CIBC World Market Inc.’s deputy chief economist, Benjamin Tal.
Still, a growing number of real estate groups and experts, including TREB, are calling for revisions to the test, arguing that it’s done what it set out to do and it’s now time to pump the brakes a little.
“Longer term borrowing costs have trended lower this year and the outlook for short-term rates, for which the Bank of Canada holds the lever, is flat to down this year,” said Mercer.
“Unfortunately, against this backdrop, we have seen no movement toward flexibility in the OSFI stress test.”