forma condo sales office.House prices in Toronto have fallen for three months in a row. House prices in Toronto have fallen for the third month in a row, and home sales in the greater Toronto area have fallen by 40% compared with the hot housing market at the beginning of 2016, with only 5912 transactions completed, with signs that the Toronto housing bubble has begun to burst.Please Visit: forma condo sales office to Get Your VVIP Registration Today!
In July, the average price of a home in the Greater Toronto area was $746000, 19% below its peak of $921000 in April. Although the average price last month was 5% higher than the same period last year, it cannot be ruled out that prices will continue to decline in the coming months. Meanwhile, the benchmark price of Toronto real estate, although up 18% from a year earlier, fell 4.6% from June to C $773000 (US $613000). That was the biggest monthly decline since records began in 2000, according to Bloomberg calculations, bringing holidays in urban areas back to March levels.
The Toronto Real Estate Board released a report saying the biggest monthly decline was due to government regulation of the housing market and the imminent collapse of Home Capital, Canada’s largest mortgage real estate company.
Analysts believe that part of the reason is that the Bank of Canada has raised interest rates for the first time in years, making mortgages more expensive. At the same time, both British Columbia and Ontario have introduced policies to curb soaring house prices in Canada, including a series of policies introduced by the Toronto government on April 20, imposing a 15% purchase tax on non-resident foreign investors. trying to curb foreign investors, especially Chinese, real estate investment in Toronto. Since the Vancouver government has introduced policies to curb Chinese home purchases in Vancouver, many Chinese investors have to turn their attention to Toronto. The Toronto government’s move really played a role in freezing the market, resulting in a sharp decline in housing transactions.
At the same time, the share price of Home Capital Group, Canada’s largest mortgage real estate company, has begun to collapse with broken capital chains and insufficient financing, causing the entire real estate industry to worry about whether it will lead to the collapse of other companies.
However, what is more worrying than the fall in prices is that due to the inability of buyers and sellers to effectively agree on the transaction price, the trading volume plummeted by 40%, resulting in market paralysis. Too many new houses are on the market for sale, and the sign “For Sale” can be seen everywhere. But consumers’ purchasing power has fallen so much that they can no longer afford it under soaring house prices.
Hilard Macbeth (Hilliard MacBeth), a real estate analyst in Edmonton, thinks so, and the housing price adjustment in Canada must begin, which is only the beginning of the bubble to burst. In the past five years, Canada’s private debt has risen by 20%, the fastest growth in the developed world. Once housing prices start to adjust, the debt problem will become even more serious. “this is the stillness before the storm.”
Macbeth believes that the bubble in Canada’s real estate market is about the same as it was before the 2008 economic crisis in the United States, and before the crash, it was even worse than in the United States. Among the indicators of household debt, Canada is even higher than the United States.
Now, the biggest bubble is in Toronto, where house prices are almost six or seven times household income, while at the top end of the market, the figure is about three times. This means that a 50 per cent adjustment is necessary to bring house prices back to normal so that people can afford to buy homes with reasonable debt. And obviously, the current house prices are not sustainable.