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Property sales plunge in Canada as Toronto sees biggest drop

A shock 35% decrease in sales in Toronto in the last 12 months is the biggest year on year decline in recent memory, according to the Toronto Real Estate Board.

'People are coming in but not buying. When you ask them why they're not buying, they say that they are waiting for prices to drop further,' said Century 21 estate agent Charles Wang.

While sales have been declining slowly this year, Wang said the impact was the most significant over the past few months as stock markets crashed under the weight of a global credit crunch.

Wang said buyers are now more aggressive about wanting agents to cut commissions in order to get a deal. Meanwhile, in a bid to lift sales, some developers at new home sites are offering giveaways such as free trips, appliances and cars.

According to Toronto Real Estate Board president Maureen O'Neill Canada will escape the kind of downturn experienced in the US. 'There's no question that in Canada the economic fundamentals to support a healthy market remain in place. Consumer confidence is being unduly affected by media reports on the US economy,' she said.

But analysts point out that the figures speak for themselves. 'You can't escape the fact that sales have dropped dramatically. The market is down and job losses will be the next thing to impact,' said real estate agent Stephen Charles.

And according to Merrill Lynch economist David Wolf the residential market is likely to become weaker than the general consensus and the 'risk of an outright bust cannot be dismissed.'

Meanwhile, the Realtors Association of Hamilton-Burlington reported average prices decreased for the first time in their area year over year, falling 8.7%. Property prices have fallen 8.8% in the Vancouver area since May.

There are also signs that developers are struggling. Construction stopped two weeks ago on a hotel and condo project in downtown Vancouver. The planned $500-million building, designed by Canadian architect Arthur Erickson, was going to be a twisting glass tower almost 60 storeys high featuring 123 residences.

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