Toronto Home Prices Surge in October, Undaunted by New Rules

(Bloomberg) -- Toronto home sales rose to a record and prices surged in October, showing little effect so far from new government rules designed to bring stability to the market.

Sales in Canada's biggest city rose 12 percent to 9,768 transactions from the same month a year earlier, while average prices jumped 21 percent to C$762,975 ($569,852), according to the Toronto Real Estate Board. The average price of a detached home was C$1,034,077, up 26 percent on the year. New listings rose 0.9 percent to 13,377 homes.

“Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments,” Jason Mercer, the board's director of market analysis, said in a statement on Thursday.

The market remained hot even as Finance Minister Bill Morneau unveiled new federal rules in October that included a stress test for home-loan borrowers and came into effect halfway through the month. The rules also stiffened requirements for low-ratio mortgage insurance and closed a tax loophole.

Toronto's march higher contrasts with Vancouver's continued sales decline since the provincial government enacted a tax on non-Canadian home buyers. Sales in the west coast city fell 39 percent in October over the prior year, while prices for all residential properties climbed to an average of C$919,300, a 25 percent jump from a year earlier and a 0.8 percent decline from September.

To contact the reporter on this story: Katia Dmitrieva in Toronto at edmitrieva1@bloomberg.net. To contact the editors responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net, Christine Maurus