(Bloomberg) -- Toronto's housing market drop is echoing Vancouver's earlier plunge but Canada's most populous city may not bounce back so quickly as new rules continue to tighten access to home loans.
Canada's two largest housing markets both saw a dramatic slide after a raft of regulations were instituted to tame runaway house prices. Benchmark price gains in Vancouver fell for five months after policy makers introduced a foreign buyers tax in August 2016 and began climbing steadily again early in 2017. In Toronto, prices have fallen for seven months since May and the market continues to cool.
To be sure, Toronto has seen some signs of recovery in the past two months, with sales in December having the smallest yearly decline since the introduction of a foreign home-buyer tax in Ontario in April. Still, the market now faces a new hurdle as homebuyers who don't take out mortgage insurance will have to qualify at higher rates.
Furthermore condo prices are taking off again in Vancouver, said John Pasalis, president of Realosophy Realty Inc. in Toronto. Prices for apartments in the coastal city were up 26 percent year-over-year in December compared with 14 percent for Toronto.
“Prices are still up but they're not skyrocketing,” Pasalis said by phone on Thursday.
--With assistance from Natalie Obiko Pearson
To contact the reporters on this story: Natalie Wong in Toronto at nwong133@bloomberg.net, Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net.
To contact the editors responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net, Daniel Taub at dtaub@bloomberg.net.
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