A sign indicating a house has been sold on the real estate market is seen in Toronto in a file photo.Mark Blinch/Reuters
The Greater Toronto Area's real estate market roared ahead last month as prices hit record highs both in the city and the suburbs.
The average price for detached houses sold within the City of Toronto reached $1.3-million in October, up 21.7 per cent from a year earlier, while climbing 29.4 per cent to average $948,191 in the suburbs, the Toronto Real Estate Board said Thursday.
Sales in the GTA set a new high for the month of October, with 9,768 properties of all types changing hands, up 11.5 per cent from a year earlier. With the seasonal slowdown, sales decreased from this year's monthly peak of 12,870 transactions in May.
The year-over-year growth rate in monthly sales has also slowed – in September, sales jumped 21.5 per cent from the same month in 2015.
For all property types in the GTA, the price averaged a record $762,975 last month, up 21.1 per cent from October, 2015, while the residential benchmark price rose 19.7 per cent to $683,000. The industry's benchmark price depicts typical properties sold and excludes outliers such as luxury mansions.
The GTA is experiencing a hot market as the Vancouver region's real estate sector cools off. Still, the average price of detached houses sold within the City of Vancouver remains twice as high as in the City of Toronto.
Economists are watching for increases in mortgage rates and the impact across Canada. Earlier this week, Toronto-Dominion Bank raised its prime rate for variable-rate mortgages to 2.85 per cent from 2.7 per cent.
Dave McKay, Royal Bank of Canada's chief executive officer, said he is digesting TD's announcement. "We'll make the decision that's best for our clients," he said.
Effective Oct. 17, with Ottawa's expanded rules that tightened mortgage lending, applications from borrowers have been stress-tested at the Bank of Canada's posted interest rate of 4.64 per cent for insured mortgages. That rate is more than two percentage points higher than what lenders are offering for five-year fixed terms.
Federal Finance Minister Bill Morneau announced the housing policy changes in early October, establishing a new standard for gauging whether buyers can handle an eventual increase in interest rates.
"We're very supportive of the changes because we are running risks of a hot marketplace that monetary policy, which would normally try to control, is not able to right now," Mr. McKay said.
About 53 per cent of the GTA sales last month were from Oct. 17 to Oct. 31.
Industry experts say it could take until mid-2017 to get a good read on the long-term effects of the B.C. government's 15-per-cent tax on foreign home buyers in Metro Vancouver, which took effect Aug. 2. Some observers have speculated that international purchasers are increasing their attention on the GTA.
Matthew Moore, president of the Americas for Juwai.com, said inquiries to the property portal in China about Vancouver from prospective Chinese buyers in September fell 40 per cent from the same month in 2015, though that is a much slower rate of decline year over year than in August.
Inquiries about the Toronto market have spiked.
"Many Chinese buyers feel that Vancouver has become overpriced and lacks good inventory," Mr. Moore said in a statement. "In September, Chinese buyer inquiries for Toronto were 86 per cent above one year earlier."
Jock Finlayson, executive vice-president of the Business Council of British Columbia, said real estate prices have been declining in the Vancouver region, and the GTA could be next to experience a slowdown.
"We've seen stratospheric increases in pricing," he said. "A modest downward price adjustment wouldn't be particularly damaging to the overall economy. But a sharp correction, particularly one that catches people by surprise, could throw a monkey wrench into economic forecasts."
With a report from Sean Silcoff
Brent Jang