Toronto Real Estate Market Update

OTTAWA (Reuters) – Greater Toronto area home sales dropped in July on a month-to-month basis, as data showed on Tuesday, following a surprise rise in June that broke a four-month streak of declining home deals.

Seasonally adjusted, sales declined 1.7% in July from a rise of 3.2% observed in June, according to data from the Toronto Regional Real Estate Board (TRREB).

Average home prices were marginally up 0.2% last month, reaching C$1.13 million ($815,178.18), the highest since December, while new listings decreased by 0.8%, TRREB reported.

Home prices have been rising since the start of the year in one of Canada’s busiest real estate markets, as demand slowly returns amid expectations of further rate cuts from the Bank of Canada.

The central bank has cut its key policy rate twice in consecutive months, reducing interest rates to 4.5% from a two-decade high of 5%.

After the recent rate cut, Bank of Canada Governor Tiff Macklem indicated that if inflation continues to ease, further rate cuts could be plausible.

Financial markets are fully expecting another 25 basis point reduction in borrowing costs in September, with over a 25% chance of a larger 50 basis point cut. This could encourage potential buyers waiting on the sidelines to enter the housing market, as mentioned by TRREB.

“The cost of borrowing is anticipated to decline further in the coming months. Expect sales to accelerate as buyers benefit from lower monthly mortgage payments,” said TRREB President Jennifer Pearce.

On a year-over-year basis, sales were up 3.28% last month, and new listings increased by 18.47% annually. Listings in Toronto have been rising as many homeowners anticipate sharp increases in mortgage payments upon renewal next year, prompting them to exit their investments.

Toronto accounts for two-thirds of the country’s condominium sales and serves as a bellwether for other major metropolitan areas.

($1 = 1.3862 Canadian dollars)