Low Faith in Toronto’s Property Market
High prices in Toronto have steadily given way to dropping consumer confidence in the market, according to a survey conducted by Bloomberg and Nanos, who have teamed up to run a consumer confidence indicator for the Canadian real estate market. This revelation in regards to consumer confidence has effectively taken a U-turn compared to just a month ago, where consumer confidence regarding the property market in Toronto was high. In particular, this confidence value is calculated by looking at the response data when those surveyed were asked whether they expected home prices to rise over the next several months. From a numbers perspective, this translates from a high of just over fifty percent a month ago, to the current low of just over 45 percent responding positively to this question.
This lack of consumer confidence can clearly be traced by the sharp drop in home prices that have taken places in Toronto. In particular, property prices have spiked over a third of their value between January and March, and then dropped considerably since then. This price drop has especially been felt in the single-family and detached home market, which has seen property values drop more than a quarter of their worth in the city of Toronto compared to the same period last year. Some experts correlate this price drop to the adoption of a new foreign buyer tax by the Ontario government, which took effect near the end of April.
Low consumer confidence in the market may actually be a good thing, at least specifically for those looking to purchase property in the city, but were unable to do so until now due to prohibitive prices. At the same time, however, those looking to sell their properties to take advantage of market trends at this point may find it too late, given the massive sales volume declines in luxury-oriented regions such as Richmond Hill – which has experienced a drop of over sixty percent in regards to sales. Other areas strongly hit by the shrinking demand has includes places such as Mississauga, Markham, Vaughan, and Newmarket, all of which have drops of more than 25 percent in sales volume.
Such trends are also bad news for recent buyers,
many of whom have bought homes at incredibly inflated rates. If current trends
continue, home prices will shrink heavily, resulting in the need to wait
several years, if not decades, to see home prices climb back to their purchase
Published Date: Jun 15 2017