Toronto's housing bubble finally pops

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Prices for both houses and condos have dropped, listing increase, sales decrease due to slow down on foreign investment and regulations changes.

I feel like the Toronto housing market has quite a fair few similarities to Sydney and Melbourne market. Both countries heavily commodity dependent (Canada oil Australia iron ore), both housing market boomed due to low interest rate, Chinese investors.

Would be interesting to continue to see how Toronto's housing market play out. I am off the belief that Sydney especially can go down 20%+ if mis-managed.

 

Yep....some of the Sydney mob will tell you it is different and it won't happen here....time will always tell all......

 

I think this is the most pertinent section:

Essentially what we have here is:

1. One data point
2. A relatively mild reduction when viewed in the context of massive year-on-year gains

I think we will need a few more data points before we can conclusively say that the Toronto bubble has burst.

Importantly, they also seem to be experiencing the beginnings of a housing finance contract as one of the (supposedly) biggest mortgage lenders has had to bailed out, with mortgages devalued to 50% of their original value.
Although Australian banks are overstretched on I/O loans, they are (to their credit) trying to make amends by raising their interest rates independently of the RBA.

Secondly, the Ontario region had instituted a 15% tax on foreign purchases. Our governments are only beginning to implement such a tax, and it is no where to this degree. I am sure that they would avoid doing so if such a policy truly did result in a housing crash.

The Australian Government has always, without fail, opted to protect housing investment on multiple occasions, and they aren't intent on changing. This is why Australian housing is different.

 

Sydney is currently stuck in this reinforcing loop

 

@propernewb agree this is only one data point vs massive increase. It will be interesting to see how things turn out in the next couple of month. I understand that "the Ontario region had instituted a 15% tax on foreign purchases" but on the other hand the Chinese government had been tightening on capital out flow for a while now. Perhaps it is the effect of both, if so the latter will also affect Australia. Plus we also have APRA changes.
@teetotal what you just posted is exactly how bubbles are created, nothing but debt fuel growth.

 

Small tweak

 

Don't you guys read the new news here on PC ? Your bad, your going to miss out, Syd will be doubling over next 4 years or so, a number of people have pointed this out, we will see.

 

Auction clearance rates are still strong. You never know
But in all seriousness I think it's very hard to put brakes on Sydney alone without impacting rest of the Australia. Hence its gonna have an extended ride and loop will continue for a few years.

 

What % drop and areas in Sydney are you roughly thinking? You firmly believe this will occur and it's not that I don't believe it will also drop in time, but how much are you thinking here. 5-10%, druitt only?

 

Melbourne has mainland Chinese investors - but they are not in all the auctions or purchasing property across the whole of Melbourne from frankston to geelong (seriously) there are other races who buying as well (greeks, Italians, indians, viets and other se Asians). Anyone who says mainland Chinese is propping up the whole of Melbourne is either delusional. Yes they do prop up some suburbs definitely but the whole of Melbourne is huge (from the likes of st albans, preston, etc).

what you have said is already happening - so no big deal. I remember before the restrictions china wise and more clamps from the fed gov, the villa units (2 bed) in balwyn, balywn north those in the block of 2-4 could easily fetch 1 to 1.1mil but now it is gone back to the 700-850K mark. And so for some sites in doncaster, doncaster east which were 1.5 mil dropping back to 1.2-1.3 million. So really yes - this has an impact on these suburbs that went to the peak

if the Aus Gov (put brakes restricting migrants from india, Pakistan, sri lanka, Bangladesh) you will see the suburbs in the west particularly the pt cook, tarneits, Williams landing, craigieburns all take a dive.) but eitherway - not one particular group is dominating the hwole market.

 

The reported clearances are still strong....

 

sydney may have peaked for sure but I don't think it is a bubble as such. as @teetotal said auction clearance rates are still strong. people are still in the market, even the first home buyers. I know someone from my work place who is looking to buy in the inner suburbs and they are a NZ couple.

plenty of examples around, but it may become a bubble if prices keep creeping up

 

Human nature says that people are more likely to buy when market is rising, and not when market is falling.

 

I know someone (investor) who is going to sell his properties soon.
And in my large building, usually you can find only one property on sale per 2-3 weeks period. Now we have 5(!).

Sydney now is -2.1% for the last 61 days and -0.27% for the last week.

 

With the new stamp duty exemptions and discounts hitting in July, youd expect a drop in sales below 800k, and especially around 600k for june. Expect a pop in July.

 

it will be areas where there are people with relatively high mortgages with young families. the real issue is that something like 40 to 50% of ppor mortgages are i/o. when it reverts to p/i repaymemts jump 40 to 70% depending on the term left on the loan

 

Yeah but they have time to pay down debt. If they locked in for 2-5 years they can just smash down the loan till then.

 

how much can people smash down a loan 100 to 150? people are borrowing 850k plus in sydney

 

price under 650K will be ok if not better. plenty of FHB who want to enter the market

 

Many of those FHBs could enter only by taking IO loan with LVR 90%. With a new policy (APRA), it will be harder.