The cold weather hasn’t cooled interest in Toronto’s housing market.
Buyers drove the average house price in the GTA to $553,193 in February, an 8.6 per cent surge from the the previous year, according to the Toronto Real Estate Board.
Recent warnings of a bubble in the Canadian market have gone unheeded as low mortgage rates continue to fuel demand across the country.
“While the strong price growth experienced over the last year should prompt an improvement in the supply of listings, sellers’ market conditions will continue to prevail this year,” said Jason Mercer, TREB’s senior manager of market analysis. His comments were made in a Mar. 5 TREB press release.
“Home prices, on average, will trend upwards at a pace well-above the rate of inflation. The impact of strong price growth on affordability will be mitigated by low borrowing costs.”
Some investors in Canada’s debt market are starting to reduce their exposure, as property prices reach new heights.
Pacific Investment Management Co., the world’s largest manager of bond funds, predicts Canadian house prices will drop 20 to 30 per cent in the coming years.
The company’s Total Return Fund has slashed its investment in Canadian debt by half over the past year.
Ed Devlin, head of Canadian portfolio management for Pimco, told the Financial Times that he and his team have been speaking with clients and writing about the overvalued housing market in Canada. This year he expects the downtrend in prices to finally begin.
Market analysts are calling for a “correction” rather than a crash, despite the record debt levels being carried by Canadians.