It’s officially a buyer’s market in many parts of the GTA as the ratio of sales to new listings continues to slide amid an ongoing real estate correction, according to a new report from a major bank. Canadian.
In a report on Thursday, RBC deputy chief economist Robert Hogue said that while “supply and demand conditions appear reasonably balanced nationally,” that is not the case. in many of the country’s most expensive real estate markets in Ontario and British Columbia.
He said that in Toronto, Ottawa, the Niagara region, Hamilton, London, Victoria, Vancouver and the Fraser Valley, the sales-to-listings ratio now hovers around 0.40, which is the threshold below which “Buyers have historically had more influence over prices. ”
Hogue predicts that because of this, buyers “will be able to further reverse some of the earlier outsized price gains in Ontario and British Columbia in the near term,” even if the price decline begins to level off nationally. where the ratio is closer to 0.50.
Its report comes just two weeks after Re/Max warned that GTA house prices could drop nearly 12% in 2023.
“It’s no surprise to see some of the biggest price declines in these markets,” Hogue said of Ontario and British Columbia. “Since the peak at the start of the year, the MLS property price index has fallen in Cambridge (-21%), London (-19%), Kitchener-Waterloo (-19%), Brantford (-18%) , Hamilton-Burlington (-18%), Kawartha Lakes (-17%), Barrie (-17%), Chilliwack (-16%) and the Fraser Valley (-13%). Property values also fell markedly in the GTA (-12%) and to a lesser extent in Metro Vancouver (-6%).
The average home price for all property types in the GTA peaked at $1,334,062 in February, but has fallen about 19% since then as part of an aggressive campaign by the Bank of Canada to raise interest rates.
In his report, Hogue said that while the slowing pace of price declines over the past few months is likely a sign that the “market downturn has run most of its course,” things are unlikely. are “heating up again in the near term”, especially in the more expensive markets of Ontario and British Columbia.
“Higher interest rates and stretched affordability will continue to challenge buyers for some time. This will keep activity quiet for some time longer, even if it stabilizes near current levels. benchmark prices will continue to fall until spring,” he warned.
RBC’s latest report comes after the Bank of Canada raised interest rates for the seventh straight time earlier this month.
The central bank has indicated that it will closely monitor inflation and employment data going forward and may be at or near the end of its rate hike cycle.
But most experts agree that the cost of borrowing is still expected to remain high for at least 2023.
The Bank of Canada’s overnight rate is already at its highest level since 2008.
“We believe the massive interest rate hikes and loss of affordability over the past year will hold buyers back well into 2023, keeping prices on a near-term downward trajectory,” Hogue said.