Home prices in Toronto rose 5.4 percent in May from a year ago, the biggest increase in five months, suggesting demand in the country’s largest housing market remains robust.
The average sale price rose to C$542,174 ($523,789), from C$514,567 a year ago, while a composite home benchmark price index for the city was up 2.8 percent, the Toronto Real Estate Board reported. Unit sales dropped 3.4 percent from a year earlier to 10,182, the board said in an e-mailed statement today.
While Canada’s housing market has been cooling over the past year in part due to regulatory efforts to stem demand, recent data have shown few signs of a sharp correction that could destabilize the market. Vancouver’s real estate board said yesterday that home sales rose 1 percent in May from a year ago, with composite prices down 4.3 percent.
“The base case scenario is a soft landing,” said David Tulk, chief macro strategist at Toronto-Dominion Bank’s TD Securities in Toronto. “You’d have to see rates move dramatically higher” for a major correction.
Finance Minister Jim Flaherty has acted four times in the past five years to make mortgage-lending rules more restrictive amid concern that Vancouver and Toronto markets were overheating. The impact of those changes are beginning to fade, Toronto Real Estate Board President Ann Hannah said in today’s release.
“A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market,” Hannah said.
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