(Bloomberg) -- Toronto home prices fell for a fourth straight month as buyers were squeezed by interest rates stuck at multi-decade highs.
The benchmark price for a home in Canada’s largest city fell 1.7% in November from the previous month to C$1.11 million ($820,000), according to seasonally adjusted data released Tuesday by the Toronto Regional Real Estate Board. That brings the total decline in Toronto home prices since July to 4.8%, the data show.
The Bank of Canada has held its benchmark interest rate at 5%, the highest level since 2001, since July as it seeks to bring inflation back to its target level. That’s weighed on the country’s housing market, forcing out some buyers and limiting what others can afford. High borrowing costs have also put financial strain on mortgage holders coming up for renewal or individuals with floating-rate loans.
While Bank of Canada Governor Tiff Macklem said last month that current rates may be high enough to tame inflation, most economists predict he won’t begin cutting them until the middle of next year. The central bank unveils its last rate decision of the year on Wednesday.
“Home prices have adjusted from their peak in response to higher borrowing costs,” said Jason Mercer, the Toronto real estate board’s chief market analyst. “As mortgage rates trend lower next year and the population continues to grow at a record pace, expect demand to increase relative to supply. This will eventually lead to renewed growth in home prices.”
There are signs some of the other sources of pressure on the market are easing. Sales increased for the first time in six months. Still, the 1.7% monthly gain brought total transactions to 4,932 — the second lowest level in the past year, the data show.
The surge in supply earlier this year that helped push prices lower may be tailing off. New listings fell for the second straight month, slipping 5.5% in November from a month earlier.
©2023 Bloomberg L.P.