The house prices in Toronto and its environed continue to rise with April recording highest increase of 3.6 percent. May recorded a 2.2 percent increasing reaching another record high for 16th consecutive months. Homeowners in most major markets including the Greater Toronto area have put their homes for sale as they rush to cash from the soaring prices before the market peaked.
Studies by the Canadian Real Estate Association reveal that the Barrie and the Greater Toronto and its environ saw all-times high listing last month. In Peterborough and Kawarthas region, the listing rose by 32 percent in Match, while in the Kitchener-Waterloo area the number of houses that entered the market rose by 18 percent.
To cap the market, the Ontario government has come up with laws to help cool down the overheated housing market in the Toronto region and the broad crescent of the province surrounding Toronto. The new law imposes a 15 percent tax for any foreign buyer who purchases homes in the Golden Horseshoe region. The law has been widely debated as the economist argue that the move by most home real estate investors to list their houses is likely to cool off the ever-rising house prices.
According to some economic analysts, it is still too early to predict the full impact of the new Ontario housing measure. However, it is clear that it is likely to bring a cooling effect on the market as most buyers are likely to sense a looming correction that could be coming. What we now need to rethink is the sustainability of the cooling effect as the demand seems to be ever growing.
Some economist argues that the new policy announced in April will help to improve the inventory of house for sale after the long severe supply shortage. About a month since the enactment of the new house buying policy, sales in most of the market has gone down, which is a clear indication that the market has started to cool down.
Due to the fact that the new listing is rising and the demand is going down, the market is likely to cool down soon. However, the effect of the federal law is likely to bring temporary changes as the market will eventually adjust. The law is only important in balancing the price growth pace in the housing market. The housing policy is likely to kick-start the soft landing, while high mortgage rates will help to solidify the effect.