TORONTO -- The recent downturn in Toronto's real estate market, brought on after Ontario introduced measures this spring including a foreign buyers' tax, is expected to be brief, the federal housing agency said Wednesday.
Property prices in the city -- which fell from an average of $919,589 in April to $793,915 last month, according to data from the Toronto Real Estate Board -- should pick up again due to supply constraints and a stronger economy, Canada Mortgage and Housing Corp. said.
"The response we're seeing in the Toronto market seems almost emotional and a knee-jerk reaction to some of the changes, which suggests that these impacts will be short-lived," Dana Senagama, CMHC's principal market analyst for Toronto, said during a conference call to discuss the agency's latest housing market assessment.
The provincial government's measures, which were retroactive to April 21, include a 15 per cent tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation allowing Toronto and other cities to tax vacant homes.
"If job creation continues in Toronto and the economy continues to fuel the housing demand, we can expect some of the pressures on house prices in Toronto to resume," said Bob Dugan, CMHC's chief economist.
Like Toronto, Vancouver also experienced a real estate slowdown following the implementation of a tax on foreign buyers a year ago. But there have been signs this year that the city's housing market is heating up again.
In its latest quarterly house price survey released two weeks ago, Royal LePage said home sales in Vancouver began to recover in the April-to-June period after the tax "bruised consumer confidence." The realtor reported in April that sales in Vancouver's housing market jumped by almost 50 per cent on a month-over-month basis.
CMHC, in its latest housing market assessment released Wednesday, kept its overall risk rating for the national housing market at strong. The quarterly report, which is based on data from the first three months of this year, precedes the Ontario government housing rules.