Toronto home prices still hot, but suburbs sizzling even more: Royal LePage report

Toronto home prices are still growing at a torrid pacebuthousing costsin thesuburbs, long thought to be theplace to go forbargains, are growing even faster.

That's according to a new survey released ThursdaybyRoyalLePage, which paints a picture of sizzling growth in the GTA suburbs, with one-time industrial hubs transforming into commuter cities as young professionals venture outside Torontoin search of more affordable housing.

According to the numbers, based on the realtor's quarterly-produced national house price composite, home-price growth in all but three of11GTAmunicipalitiessoared past the growth in the city itself in the third quarter of 2016, with the biggest growth spurt inOshawa.

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The findings come just one day after federal Finance Minister Bill Morneautoutednew measures to stabilize housing prices across the country, including limiting foreign money coming into Canadian real estate.

Those measures also includea new "stress test" for insured mortgagesto make sure borrowers are still able to make their payments if interest rates climb inthe big banks' five-year posted mortgage rates.

"We need to stay focused on the risk to Canadian families in housing," Morneau said, defending the measures at the Public Policy Forum's Growth Summit in Ottawa on Wednesday.

"Canada is not really one uniform market but really three different markets," he said, adding that Vancouver and Toronto and surrounding areas are experiencing 'unusually high growth.'"

Now, the numbers

As Thursday's report shows, that is an understatement. Here's a look at the year-over-year percentage increases and the average home pricesduring the third quarter of this year:

Home prices in Toronto grew by 12.1 per cent to$714,002. That's on parwith the national average increase of 12.0 per cent, with the average price of a home in Canada sitting at $545,5414.

Butin Oshawa they surged by 26 per cent to $453,975, followed closely by Richmond Hill, where they grew by 25.7 per cent to a whopping $1,074,829increases the report says are dueto limited inventory and continued interest from foreign buyers.

In Markham, prices grew to an overall average of $870,353, up 15.2 per cent, and in Scarborough they climbed 13.1 per cent to an average of $583,760.

To the west, growth shot up 12 per cent in Brampton to an average of $569,510 and 9.6 per cent in Mississauga to an average of $609,266. In Halton Region, low inventory made Oakville a top performer with a 15.4 per cent increase driving prices to an average of $894,696.

Demand dropping or just displaced?

So how do the priceincreases in the GTA compareto elsewhere in the province?

According to the report, home prices in the tri-cityarea ofKitchener-Waterloo and Cambridge grew 9.1 percent to an average of $371,474 and in Hamilton by 10.3 per cent to an average of $419,830. Ottawa, meanwhile, came in at 3.6 per cent with an average price of $411,654.

For Royal LePage president Phil Soper, the numbers indicate that Canada's real estate market shows no sign of a hard correction. And while news of the newmeasures will have spooked some consumers, at least for now, early signs showCanadian homebuyers are adjusting quickly, the report says.

Some observers say that while the new mortgage rules, which go into effect Oct. 17, will help to curb some of the demand in the real estate market, theireffects will be felt most severely in the Toronto condo market, where sale prices are below $1 million a property and hence subject to the new "stress test" rule.

Last week, CIBC's chief economist Benjamin Tal told CBC News the measure will likely push more potential home buyers to the rental market. That, Talsays, would be a positive shift as long as the government also puts policies in place to make more affordable rental housing available.

"If you remove people from the buying mode, you have to provide them with an alternative."