August new housing sales hit historic lows, and the Building Industry and Land Development Association said some of the blame can be attributed to government taxes and fees that can make up almost 25% of the price of a single-family home.
Across the greater Toronto area, or GTA, a total of 464 new homes were sold in August, down 46% from a year earlier and 73% below the 10-year average. BILD represents 1,200 member companies in the GTA.
"August's new home sales data paints a stark picture of a housing market that is struggling with deep structural issues that have made the cost to build too high," said Justin Sherwood, senior vice-president of communications and stakeholder relations at BILD, in a commentary. "A key component of those costs are the excessively high government taxes and fees, which add, on average, $355,000 to the cost of an average single-family new home in the GTA."
In August, a total of 235 condominium apartments were sold, including units in low-, medium- and high-rise buildings, stacked townhouses and loft units. That sales volume is down 61% from August 2023 and 81% below the 10-year average, according to BILD.
The group said 229 single-family homes sold in August, down 14% from August 2023 and 56% below the 10-year average. Single-family homes include detached, linked, and semi-detached houses and townhouses but not stacked townhouses.
"The crisis is real and will be reflected, in the next several years, by fewer jobs, fewer new homes and compounded affordability challenges," Sherwood said. "We are calling on municipalities across the GTA, supported by the provincial and federal governments to take immediate steps to address the fundamental challenges facing our industry by controlling and lowering the charges on new home construction."
Construction decline concern
The slowdown in sales could ultimately lead a reduction in new-home construction and lower apartment supply because many of the would-be homebuyers would be investors who planned to rent their properties, especially in high-rise condos.
Canada Mortgage and Housing Corp. is already seeing a longer-term decline in new home construction across the country, with the federal Crown Corporation reporting the six-month trend in housing starts was 248,480 units in August. That's down 2.9% from 255,794 units in July, according to the national housing agency.
The trend measure is a six-month moving average of the seasonally adjusted annual rate of total housing starts for all areas in Canada.
"Year-to-date starts in Ontario and British Columbia have decreased across all housing types," said Bob Dugan, chief economist with CMHC, in a commentary on the latest numbers. "As the housing shortage continues, higher levels of construction are needed to restore affordability in Canada's urban centres."
Ottawa increased the price eligible for federal-backed mortgage default insurance from $1 million to $1.5 million, as CoStar reported, a move meant to address the rising prices in Vancouver and Toronto over the last decade.
With the Bank of Canada reducing its overnight lending rate three times over its last three meetings and long-term five-year mortgage rates also falling, there is speculation that home prices may rise again, further lowering sales.
However, the Toronto building group said the benchmark price for new condominium apartments was $ 1,031,356 in August, down 5% over the last 12 months. The benchmark price for new single-family homes was $1,598,852, down 7% from a year ago.