* Toronto home prices up 31.7 pct in April
* New listings up 33.6 pct, sales down 3.2 pct
* Home Capital shares down 6.5 percent
(Adds Home Capital share price)
By Andrea Hopkins and Leah Schnurr
OTTAWA, May 3 Toronto home prices and new
listings surged in April while sales fell, data showed on
Wednesday, suggesting the market may be starting to rebalance
after new rules were introduced to address fears of a housing
bubble in Canada's largest city.
The Toronto Real Estate Board (TREB) said its home price
index jumped 31.7 percent in April from a year earlier, while
new listings rose 33.6 percent and sales dipped 3.2 percent.
Last month, the provincial government introduced a 15
percent tax on property purchases by foreign buyers as part of
16 measures designed to cool Toronto's red-hot housing market.
While TREB said it was too early to say whether the rise in
new listings was in response to the new rules or sellers
reacting to the recent surge in prices, the market will
rebalance if the trend continues.
"If new listings growth continues to outpace sales growth
moving forward, we will start to see more balanced market
conditions," said Jason Mercer, TREB's director of market
analysis. "It will likely take a number of months to unwind the
substantial pent-up demand that has built over the past two
Canada's housing market has been robust in the years since
the financial crisis, but the acceleration in prices in Toronto
has led to worries that parts of the market are overheating.
Canadian subprime mortgage lenders raced to shore up
confidence earlier this week as depositors pulled money out of
non-bank lenders Home Capital Group Inc and Equitable
Group's high-interest savings accounts.
Shares in Home Capital were down 6.5 percent to C$7.25 at
1015 EST on Wednesday. Ratings agency Standard & Poors
downgraded the long term credit ratings of the company after the
market closed on Tuesday citing factors including funding
concerns. Home Capital also delayed its first quarter earnings.
Ontario's securities regulator has accused Home Capital of
making misleading statements to investors.
The foreign buyers tax should cool demand, economists say,
because it shows the Ontario government is determined to slow
the market, even though there is little data showing those
buyers are a large part of the market.
The long looked-for surge in new listings "certainly
foreshadows a cool down in price growth," said Sal Guatieri,
senior economist at BMO Capital Markets.
Guatieri said the uncertainty caused by the new government
measures likely prompted buyers to hang back while sellers sped
up plans to list their homes.
(Additional reporting by Matt Scuffham in Toronto; Editing by
Jeffrey Benkoe and Alistair Bell)