Once the cycle of interest rate hikes ends the housing market will improve: Chief economist
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The Greater Toronto Area housing market took another hit in June as more buyers took a wait-and-see approach amid rising borrowing rates.
Home sales sank 41.4 per cent in the month compared to last year, the Toronto Regional Real Estate Board (TRREB) said Wednesday, as 6,474 properties changed hands.
Sales were down 11.1 per cent month-over-month, or 4.7 per cent on a seasonally-adjusted basis.
All types of properties across Greater Toronto suffered double-digit sales declines ranging from 30.8 per cent (for detached homes in the City of Toronto) to 44.4 per cent (for townhouses in the outlying 905 region, which encompasses municipalities including Mississauga and Brampton).
“Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein home buyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up,” said Kevin Crigger, TRREB’s president, in a press release.
“Expect current market conditions to remain in place during the slower summer months. Once home prices stabilize, some buyers will re-enter the market despite higher borrowing costs.”
The cost of borrowing is set to move even higher next week when the Bank of Canada announces its interest rate decision. Market data suggest, and economists widely expect, the central bank will follow in the footsteps of the U.S. Federal Reserve and hike its benchmark rate three-quarters of a point to 2.25 per cent.
As more homebuyers sat on the sidelines in June, it appears sellers were also playing the waiting game: the number of newly-listed homes for sale inched up just one per cent in June, compared to a year earlier.
Home prices continued to trend lower on a monthly basis, with the average selling price falling 5.5 per cent to $1,146,254 — marking the fourth consecutive monthly decline.