(Bloomberg) -- Toronto home prices fell for a second straight month as more owners brought properties to market.
The benchmark price of a house in Canada’s largest city dropped 0.8% in September to C$1.15 million ($840,200), following a 0.2% decline the previous month, according to data released Wednesday by the Toronto Regional Real Estate Board.
Toronto’s real estate market is slowing markedly, with sales in September declining 1.8% to just 5,205 transactions — the lowest in six months, according to seasonally adjusted data.
Mortgage rates near 15-year highs are squeezing buyers from the market and there are few signs of it letting up. The latest inflation report showed consumer price increases accelerated in August. A Bank of Canada official warned that the central bank is “not out of the woods” as it seeks to tame inflation.
Now, with few indications that rates will improve soon, more homeowners are moving to put properties for sale. New listings jumped 11% in September from a month earlier. It was the sixth consecutive month that new listings increased on a seasonally adjusted basis.
Read More: Housing Investors Are Getting Flushed Out as Canada’s Rates Rise
“Supply is coming, and it’s laying the foundation for price declines,” said Robert Marsiglio, a real estate agent in the Toronto area. “We’re hearing about renewal nightmares for people, payments going up 30% or 40% from when they locked into their original rate. So there’s probably a lot of that stress creeping into the market, too.”
Higher rates may linger. The real estate board said the consensus view is that borrowing costs will remain elevated until the middle of 2024. Investors weighing the central bank’s next moves in the rates market currently assign a better-than-50% probability that the Bank of Canada will raise its policy rate again before the end of the year, according to data compiled by Bloomberg.
Fixed-rate mortgages, which are tied to Canadian government bonds rather than the central bank rate, are also under pressure. The yield on 5-year government debt rose to 4.418% on Tuesday, the highest since October 2007, and has now surged more than 1.5 percentage points since late March.
“We did experience a more balanced market in the summer and early fall, with listings increasing noticeably relative to sales,” Jason Mercer, the board’s chief market analyst, said in a statement. “This suggests that some buyers may benefit from more negotiating power, at least in the short term.”
(Updates with comment from real estate agent in sixth paragraph.)
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