Home Sales Down in June. Land Transfer Tax is a Heavy Burden in Toronto Area

According to Toronto Real Estate Board (Treb) at the begining of July Greater Toronto REALTORS® reported 9,422 home sales through the TorontoMLS system in June 2012. The number of transactions was down by 5.4% in comparison to June 2011. The year-over-year decline was largest in the City of Toronto, where sales were down by 13% compared to June 2011. Sales in the rest of the Toronto Real Estate Board (TREB) market area were comparable to a year ago.
“Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair Land Transfer Tax,” said TREB President Ann Hannah. “Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions.”
The average selling price in June was $508,622 – up by 7.3% compared to June 2011. The mortgage payment associated with the average priced home in June, assuming five per cent down and a five-year fixed rate mortgage amortized over 25 years, would account for approximately 35% of the average household’s income in the GTA after adding property tax and utility payments.
“According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable. The share of the average household’s income going toward major home ownership payments for the average priced home remains below the 39 per cent ceiling recently announced by Mr. Flaherty,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.