Toronto home prices slid three per cent on a month-over-month basis and sales slowed significantly in April as rising interest rates started to weigh more heavily on the housing market.
While the average home price of $1.254 million was still up 15 per cent from last year, sales were off 41 per cent from last April and down 27 per cent from the month prior, the Toronto Regional Real Estate Board said Wednesday.
“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.”
In its fight against the highest inflation rate in decades, the Bank of Canada has so far raised its key rate 75 basis points to one per cent. These rate increases have started to ripple 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.
“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.
