The average price of a home sold in Toronto in January climbed 4.9% to $552,575, according to the Toronto Real Estate Board which predicts more increases in 2015 amid near record-low interest rates.
Nervous Calgary homeowners put their homes on the market in January, well outpacing demand, and creating conditions that could lead to a price collapse. Read on
Sales in Canada’s largest city also remained strong and climbed 6.1% last month from a year earlier.
With the Bank of Canada cutting rates, which has put the prime lending rate at 2.85%, and five-year fixed rate mortgages below 2.5% at some financial institutions, the board’s head of analysis thinks there could be even more room for price growth.
“Home price growth is forecast to continue in 2015. Lower borrowing costs will largely mitigate price growth this year, which means affordability will remain in check. The strongest rates of price growth will be experienced for low-rise home types, including singles, semis and town houses. However, robust end-user demand for condo apartments will result in above-inflation price growth in the high-rise segment as well,” Jason Mercer, director of market analysis, for TREB, said in a statement.
The Toronto news follows a report from Vancouver which shows its market also remains strong even as Alberta sales have fallen drastically. New listings have spiked in Calgary and Edmonton and that is expected to put pressure on prices.
On Tuesday Edmonton reported sales were down 26% in January from a year earlier while Calgary reported a 39% decline during the same period. Meanwhile, Vancouver reported a strong 8.7% gain in sales last month from a year earlier with prices 5.5% during the same period.
Benjamin Tal, deputy chief economist with CIBC, said there is very little likelihood that the price decline expected in Alberta will affect the rest of the country.
“It’s very difficult to imagine a scenario where Alberta will have a significant effect on the rest of the country,” said Mr. Tal, referring to house prices.
In Toronto, there appeared to no impact as the average price of detached homes inches closer to $1-million. Prices in that category in the city rose 7% from a year to $948,713.
“The January results represented good news on multiple fronts. First, strong sales growth suggests home buyers continue to see housing as a quality long-term investment, despite the recent period of economic uncertainty. Second, the fact that new listings grew at a faster pace than sales suggests that it has become easier for some people to find a home that meets their needs,” said Paul Etherington, president of the board, in a release.