Toronto house prices expected to climb 25% this year
Thursday Mar 30th, 2017
Read it and weep, prospective Toronto home buyers. Economists don't see the red hot real estate market cooling off anytime soon. After initially estimating a jump of 10 to 15 per cent in Toronto house prices over 2017,TD Economics now puts that number at 20 to 25 per cent.
The updated figures follow a sizzling start to the year that's witnessed 22 and 28 per cent increases in January and February respectively.
According to TD Economics Chief Economist Beata Caranci, "evidence is building that speculative forces are growing deeper roots, which raises the risk that prices will move closer to the top end of [our] forecast in the absence of policy measures."
There's been renewed debate about a possible foreign buyers tax in Toronto, but there's no consensus that such a measure would cool the market as desired. Instead, economists at Scotiabank suggest that a tax on house-flippers would help to curb rising prices.
Beyond 2017, Caranci sounds a bit more optimistic, but far from confident. "We look for the effects of higher mortgage rates and eroding affordability to 'cool' the GTA market in 2018, but here too we would not be surprised to see an overshoot," she writes.
As for a the talk of a local real estate bubble, Caranci characterizes that discussion as a distraction, claiming it's only possible to determine a bubble after it's burst.
"What we can say is that when comparing this housing cycle to previous ones that lack a happy ending, Toronto appears to be moving in that direction."