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Money Talks: New Housing Rules Slow Toronto Real Estate; Home Prices Up 10% Nationwide

18 May 2017

Canadian property values continued to soar last month, prolonging the uptrend that has pulled average prices well north of $500,000. But for Toronto, signs of a cooldown emerged just one month after the Ontario government enacted more than a dozen new rules aimed at curbing speculation.

This is Money Talks for May 17, 2017.

Canada’s housing market remains on solid footing, as favourable mortgage rates and an improving jobs outlook fuel demand for real estate.

But the picture isn’t entirely rosy. Canada’s future trade relationship with the United States hangs in the balance after U.S. President Donald Trump slapped a 20% tax on Canadian softwood lumber. The president came close to doing away with the North American Free Trade Agreement (NAFTA) entirely before calmer heads prevailed.

NAFTA remains good for now, but nobody knows for how long.

Personal Finance

With tax season coming to an end, a majority of Canadians are expecting a refund from the CRA. For the 2015 tax year, the average tax refund was $1,682, with 59% of tax filers getting money back. The numbers are expected to be similar for the 2016 tax year.

With many Canadians struggling with personal debt, many of those refunds will likely to be diverted to credit card payments. Household debt hit a new record of $2 trillion at the end of last year. According to the latest numbers, the average Canadian owes $167 for every $100 of disposable income.[1]

Real Estate

Canada’s home values rose in April for a fifteenth consecutive month thanks to hefty gains in the Golden Horseshoe. Compared to last year, April home prices rose 10% nationwide to an average of $559,317, according to the Canadian Real Estate Association.[2]

While Toronto also witnessed an increase in average selling prices, signs of a broad cooldown have emerged in the wake of Ontario’s new housing rules. For starters, home sales fell nearly 7% across the GTA from March to April, while new home listings have soared. Information from realtors also suggests buyers are hesitating – a rarity during the spring buying season.[3]


Canada’s mortgage rate outlook remains favourable for buyers, but that could change as early as 2019. According to a new report from Desjardins, rates could be set to rise 2% over the medium term. In their baseline forecast, economists at the credit union see fixed-rate mortgages climbing one percentage point between now and early 2019 as the economy continues to recover.

Desjardins warms of a “widespread increase in interest rates is to be expected over the next few years if the economic expansion continues in North America.”[4]

Canada’s economy added jobs at a torrid pace through the first quarter, as the unemployment rate fell to its lowest level since the financial crisis. Although hiring growth disappointed in April, the economy has added an average of 22,000 jobs over the past six months.[5]

For the latest Canadian mortgage rates, click here.

Interest Rates

The Bank of Canada hasn’t been impressed by the apparent recovery in the jobs market. In fact, the BOC has maintained a decidedly cautious outlook on growth as officials mull uncertainty over NAFTA and U.S. trade relations. While strong, Canada’s recovery in the past two quarters has been “uneven,” according to the BOC.

The central bank voted to leave interest rates at 0.5% during its latest policy meeting. Officials expect economic growth to moderate in the coming years, with volatile oil prices pressuring future gains. Exports, which are driven largely by energy, account for roughly one-third of the Canadian economy.


[1] Reuters (March 15, 2017). “Household debt hits fresh record, with Canadians owing $2 trillion by the end of 2016.” Financial Post.
[2] CBC News (May 15, 2017). “Average Canadian house worth $559,317 last up, up 10% in past year.”
[3] Daniel Tencer (May 15, 2017). “4 Signs Toronto’s Housing Bubble Has Started To Deflate.” Huffington post Canada.
[4] Josh Sherman (May 10, 2017). “Be prepared for Canadian mortgage rates close to 5% by 2019: report.” Buzz Buzz Home.
[5] Reuters (May 5, 2017). “Canada jobs growth disappoints in April; unemployment lowest since 2008.”

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