Toronto Yearly Property Price Changes

2009

Home owners and people contemplating purchase of investment property ask realtors what they think of current state of real estate market. Stories about the market's ups and downs occupy prominent places in the news. But looking at the real estate market within a limited time span does not, in our view, convey enough information on which to base serious decisions.

For those who like to analyse historical data, we prepared a graph showing year-end to year-end changes in average property prices in Toronto. These changes, shown as a percentage growth (or decline), may allow the reader to get a general idea about the volatility of the market in the greater Toronto area.

Each point of the graph represents the total change from the previous year. The downwards slope of the line does not reflect a drop in the property prices, unless the next point falls below the red "zero" line, into the pink (negative growth) area. The graph is meant only to show the rate of growth in real estate prices. For information on Toronto real estate price trend please visit our Housing Price Trend in Toronto page.

As can be observed on the above graph, the largest year-end to year-end price change (36%) occurred in 1987. The second largest change was in 1974 (34.5%). These two high points were followed by slow-down in the market. Between 1990 and 1996, with one exception of a small, 1.2% increase in 1994, the prices were decreasing. The total decrease in real values was 38.1% (it is the sum of the 6 declines minus one small increase). When inflation is taken into account, the actual decline in value is a loss of 62.8%. After the second largest increase (34.5% in 1974) there was no actual price decrease, but, when serious inflation of that time is taken into consideration, the decrease in 'after inflation' value was 25.8%.

In the last decade, since 1997, when the real estate market in Toronto recovered from the post-1989 slump, the yearly increases in property prices have been moderate, and the volatility of the market was low. It is a good time, therefore, to invest in real estate, especially if that investment is to be held for a longer period of time.

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For more information about Toronto real estate market please visit the Toronto Real Estate Blog - a weblog about trends in the Toronto area real estate market.