- Eye-popping rise in Toronto home prices
- Canada to ease airline ownership rules
- Quarterly earnings results pour in
- Prosperity in Canada ‘under threat’
Jump in average sale price of 905 detached home
Housing markets in and around Toronto are positively on fire, with record sales and eye-popping price gains, particularly in the suburbs.
What we don’t know yet is how Canada’s new mortgage and tax measures are affecting those markets, though economists expect the pace of those gains to ease in time.
Home sales in the Greater Toronto Area hit a record 9,768 in October, up 11.5 per cent from a year earlier, the lastest statistics show.
The average sales price across the GTA surged 21.1 per cent to $762,975, while the MLS home price index, which is seen as a better barometer, climbed 19.7 per cent, the Toronto Real Estate Board said.
“To some extent, we have become a bit inured to these extremely strong figures flowing from Toronto real estate - but it’s worth pounding the point home yet again that a 21.1-per-cent year-over-year rise in prices is not normal,” said BMO Nesbitt Burns senior economist Douglas Porter.
“It compares with inflation and wage gains of around 2 per cent or less and marks the fastest gain since the boom years of the late 1980s,” he added.
“While conditions will likely slow in the months ahead as the mortgage rule changes weigh in more heavily, we have to appreciate just how very strong the underlying momentum in the market was heading into the rule changes.”
The impact of the new federal rules could be difficult to gauge because they come in two phases, with the first phase kicking in only halfway through last month.
About 47 per cent of October’s sales were entered into the system by Oct. 16.
“As we move through November and December, we will be watching the sales and listings trends closely, in light of the recent policy changes announced by the federal minister of finance,” TREB chief Larry Cerqua said in a statement accompanying the numbers.
BMO’s Mr. Porter wondered if some of the Toronto gains came from buyers scrambling to buy before the federal rule changes.
A breakdown of the latest statistics yields some exceptional findings:
A detached home in Toronto’s 416 area code now goes for an average $1.3-million, up 21.7 per cent in October from a year earlier. A comparable house in the surrounding 905 areas is worth less, an average $948,191, but that’s up by 29.4 per cent.
Orangeville, South Simcoe County and the Halton, Peel, York and Durham regions all scored huge gains.
“New listings were up slightly in October compared to last year, but not nearly enough to offset the strong sales growth,” said Jason Mercer, the group’s director of market analysis.
“This mean that seller’s market conditions continued to prevail as buyers of all home types experienced intense competition in the marketplace,” he added.
Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments.”
New listings in October rose by less than 1 per cent, while active listings were down almost 35 per cent.
Toronto is moving in the opposite direction from Vancouver, which has also been hit by a recent 15-per-cent tax on foreign buyers.
As The Globe and Mail’s Brent Jang reports, Vancouver home sales plunged almost 39 per cent last month.
Indeed, Mr. Porter cited the fact that “the GTA’s market seems to have been launched into the stratosphere at the very point Vancouver’s started coming back down to earth after the B.C. tax on non-resident buyers.”
It’s another big day for quarterly results. Here are some of the latest:
Canada to ease restrictions
The Canadian government plans to ease foreign ownership restrictions on domestic airlines to 49 per cent from the current 25 per cent, The Globe and Mail’s Bertrand Marotte reports.
Transport Minister Marc Garneau also announced at a Montreal gathering that he plans an airline passenger bill of rights.
Also in the works is approval of exemptions for Canada Jetlines and Enerjet from existing foreign ownership restrictions.
Prosperity ‘under threat’
Canada still ranks among the most prosperous countries in the world, but its prosperity is “under threat” because of health care, education and security, a new report warns.
Canada is in the No. 5 spot in the prosperity index released by the Legatum Institute, a European think tank that compiles its annual survey based on a nation’s economy, business environment, governance, education, health, safety and security, personal freedom and other categories.
Trailing behind New Zealand, Norway, Finland and Switzerland, Canada benefits from what the group called the “Commonwealth Effect.” The “Anglosphere” group of New Zealand, Australia, Canada and Britain is more prosperous than any other comparable bloc, it said in its report.
Prosperity in Canada has been rising in line with those of comparable countries, according to Legatum.
“Greater labour market flexibility has improved the country’s business environment ranking to third,” the group said.
“Governance has been improving, and personal freedom and social capital remain among the three best in the world,” it added.
“Free markets, free people, and strong society are increasingly the cause of Canada’s prosperity success.”
There’s a caveat, though.
Canada is now the “land of the free, land under threat,” the report said, warning the country has given up ground in the areas of health and education, which could affect future rankings as others progress.
“Despite stagnating wealth, the U.K. has maintained strong prosperity growth by means of social reform,” Legatum said.
Ditto for Finland.
“With Canada slipping in both health and education, the nation’s consistent top six finish is threatened,” according to the report.
“If Canadian prosperity remains static, large gains by countries currently ranked below Canada threaten to propel them upwards and beyond. Finland has already overtaken, and the U.K. is rapidly catching up.”
We’re not alone.
Both Canada and the United States have slipped where the categories of health and safety and security are concerned, Legatum said, which is “undermining gains made elsewhere.”
Here are Legatum’s latest rankings: