GTA house prices could rise 16% in 2017

In case you need more evidence of just how hot the Toronto real estate market is, the Toronto Real Estate Board (TREB) has released its annual market outlook report.

The average selling price for a home in the Greater Toronto Area (GTA) is expected to increase 10% to 16% in 2017, reveals the report, with an average price between $800,000 and $850,000. Prices for low-rise homes — detached and semi-detached houses and townhouses — will see the greatest increases.

For those who can still afford to buy, there’s another problem: supply can’t meet demand.

Read: New homes inventory in GTA at ‘crisis levels’

“While changes to federal mortgage lending guidelines and higher borrowing costs may impact some would-be home buyers, the big impediment will be the lack of inventory,” says Jason Mercer, TREB’s director of market analysis, in a release. “Active listings at the end of December were at their lowest point since before the year 2000. […] This will put a ceiling on sales growth.”

While prices go through the roof.

Read: Beware rising housing prices: CMHC

Still, buyers are up for the financial challenge, with the average GTA homebuyer making a down payment of almost 28% (almost 26% for buyers in Toronto proper, and almost 24% for first-time buyers), reveals a November 2016 survey by Ipsos, cited in the report.

One challenge, however, is the potential for increased borrowing costs if rates rise this year. Further, under new mortgage rules, the majority of borrowers will be subject to a stress test, under which they must qualify at the posted chartered bank rate. That could take some buyers out of the market.

Read: CMHC hiking mortgage loan insurance premiums for homebuyers

Housing affordability is indeed a growing concern.

“Home prices will increase well above the rate of inflation and income growth in 2017,” says TREB CEO John DiMichele, in the release. “While governments have been focusing their policy solutions on allaying demand, what is needed are policies that focus on the lack of available homes […]. The public, private and not-for-profit sectors need to come together to focus on innovative solutions to the housing supply issue.”

Read the full report here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.