Toronto home prices gain by 20%, and buyers encounter new mortgage rules

 

Toronto’s record-setting existing homes market released more eye-popping results for sales and prices, but realtors say they’ll have their eye on new federal mortgage rules and their impact on the market.

The Toronto Real Estate Board said Wednesday it recorded 9,925 sales through the multiple listing service in September, a 21.5 per cent increase from a year ago. Based on the board’s MLS home price index, the average selling price for all properties in the region reached $755,755, a 20.4 per cent increase from a year ago.

“We continued to see strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September. The sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types,” said Larry Cerqua, president of the board, in a release.

 

Canada’s housing market will now see how it reacts to new rules announced Monday by the federal government which will make it tougher to qualify for a loan based on a crackdown on mortgages backed by Ottawa. Among the changes will be a stipulation that consumers qualify based on the posted rate for a five-year fixed rate mortgage, now 4.64 per cent — a move that will see consumers qualify for smaller loans.

The largest private mortgage default insurer in the country, Genworth MI Canada Inc. has already said it expects many consumers will not qualify under the new guidelines and potentially have to look for cheaper homes.

 

 

Other key changes announced by Ottawa included a crackdown on a loophole allowing some people to claim a capital gains exemption on principal residence — a tax break only open to residents of Canada. New rules will force any home sale for a principal residence to be declared on a tax return.

For now, the Toronto market shows few signs of slowing down. Toronto suburban detached homes continue to be the hottest commodity in the market, with the average sale price in the 905 region up 26.6 per cent from a year ago to $928,414. In the city of Toronto, the average detached home sold for $1,294,482, up 23 per cent from a year ago.

Condominium units are appreciating at the slowest rate throughout the metro region. In the city of Toronto, the average condo price was up 6.5 per cent from a year ago to $446,294.

Read the full post in Financial Post