Photographer: Cole Burston/Bloomberg

Toronto Housing Market Slows After New Tax, Home Capital Woes

  • Unit sales drop 16% in first two weeks of May, data show
  • New house listings soar 47% as price growth slows to 17%

Home price growth in Toronto slowed in the first two weeks of May and sales fell 16 percent from last year, signaling that a new tax on foreign buyers and funding crisis at mortgage lender Home Capital Group Inc. may be cooling the market in Canada’s biggest city.

The average selling price for all home types was C$890,284 ($658,000) through May 14, up 17 percent from the same period a year earlier and down 3.3 percent from the full month of April, according to data from the Toronto Real Estate board obtained by Bloomberg News. Housing prices jumped 25 percent in April and 33 percent in March from the year-earlier periods.

“I’d say indications from the last couple of weeks would be that the
market is still very healthy but not crazy,” said Peter Gilgan, chief executive officer of Oakville, Ontario-based Mattamy Homes Ltd., one of North America’s largest privately owned home builders. He spoke in an interview before the early May results were available.

Slower demand is hitting as more homeowners opt to sell. New listings in the first half of May climbed 47 percent from last year to 12,626 and unit sales fell to 5,021, the board found. The preliminary May data reflects about three weeks of home-buying activity since Home Capital was accused by regulators of misleading investors, triggering a run on deposits. It also follows the Ontario government’s April 20 announcement of a 15 percent tax on foreign purchasers, part of a broader effort to cool off rapidly rising property prices.

“If we continue to see new listings growth outstripping sales growth we could see the pace of price growth slow further,” the board said in the mid-month report.

Full housing results for May are set to be released early next month.

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