It’s not just end-users in the housing market who have been sidelined by rising interest rates, but real estate investors are also being deterred from buying properties, according to an area broker. of Toronto.
“These rate hikes have really turned investors off. You know, I think over the last few years a lot of people were frustrated with the amount of speculation and investment going on in real estate in Toronto. And that really stopped most investors from making a purchase,” Nasma Ali, broker and founder of One Group, said in an interview Wednesday following the Bank of Canada’s decision to raise its benchmark rate by three quarters of a point to 3.25%.
While investors’ buying plans are frozen, many of them are also not selling in this market and instead opting to rent their properties until house prices recover, she added. .
Home sales and prices in Canada fell significantly in the wake of rising rates as the rental market warmed. Research firm Urbanation reported condo rental prices in the Greater Toronto Area reached a record high of $2,533 per month on average in the second trimester.
“Investors continue to pay out of pocket due to high interest rates. So it makes no sense for them to buy anything right now. And many of them are just waiting. They are waiting for the bottom. They don’t know when that low will be hit, but they’re ready to act then,” Ali said.
In January, the Bank of Canada released a report that found investors accounted for approximately a fifth of real estate purchases dating from 2014.
Ali said while there are still buyers who are determined to move, most are waiting for interest rates to stabilize.
“A lot of buyers are waiting on the sidelines and that’s just going to make them wait longer to make a move. … But some people just wait for rates to stop rising and then they’ll act,” she said.
For those choosing to buy now, Ali suggested buyers stay on the lower end of their buying budget to account for higher borrowing rates in the future.