Toronto buyers drove up home sales in London in 2017, CMHC confirms
New data from CMHC shows GTA buyers accounted for 9 per cent of sales; even higher for more expensive homes
What many London real estate agents knew in their gut has been confirmed by hard data.
A large spike in homes sales last year was due in large part to an influx of buyers from the Greater Toronto Area.
New data from the Canada Mortgage and Housing Corporation shows GTA buyers accounted for 9 per cent of all resale transactions in the first quarter of 2017 — and 20 per cent of sales of homes priced over $450,000.
It was a substantial increase over the general trend, which saw GTA buyers accounting for just 3 per cent for all transactions between 2015 and 2016.
Amran Wali, a senior analyst with CMHC, told CBC's London Morning Friday the figures translated into sales of 215 homes in the London Census Metropolitan Area (CMA) in the first quarter of 2017 and 250 homes in the second quarter of the year.
Boost for east London
Wali said most of the homes purchased by GTA buyers were concentrated in north and south London.
Strong resale activity is rarely seen in east London.
"But what we saw in 2017 is, once the GTA buyers came in, prices in north and south London began rising rapidly, and this kind of pushed some of the local buyers out, and then we started to see strong sales activity in east London."
Wali said a number of factors contributed to the Toronto invasion, including London's strong population growth and the major infrastructure projects that are being planned, including Bus Rapid Transit and the Ontario government's pitch to build high-speed train service from Toronto to Windsor with a stop in London.
Appealing low prices
But prices were the biggest draw.
"Homes in London were, as you know, very affordable, relative to homes in the GTA, so affordability was definitely one of the huge factors."
Wali said GTA buyers contributed to very strong price growth in London.
"I mean, price growth in London's market was the strongest it's been since 1986."
Wali said his analysis was produced to determine whether there was hard data to support the anecdotal evidence he was hearing last year.
He said every time he came to London to meet with realtors, residents and builders, he was constantly told GTA people were outbidding local buyers.
"They'd tell me it's these GTA buyers outbidding us, and we can't afford our homes [here]…All I would hear was GTA, GTA, GTA."
Current outlook
Wali said the London real estate market looks a little bit different now. Demand among GTA buyers has "really died down" due to the implementation of the Ontario Fair Housing Plan in April, new mortgage rules as well as rising interest rates.
He said demand in London "is still very strong and price growth is still growing by 10 per cent year over year." However, sales activity in London is "far weaker" than it was in 2017, due largely to the fact that there is "very, very little supply."
As for 2019, Wali said he doesn't think sales activity is going to be as strong as in 2017 but it will likely be higher than historical standards.