Canada’s housing market is showing signs of coming out of the slumber it had been in since mortgage stress tests were implemented last year, as sales and prices have started to rise again, the Canadian Real Estate Association says.
CREA said Thursday that the average price of a Canadian home sold in July was up by 3.9 per cent compared to the same month a year earlier, and the number of homes sold has risen, too, by almost 13 per cent.
After hitting a six-year low in February of this year, activity seems to be rebounding across the country, as sales were up in about 60 per cent of all markets across the country.
“Sales are starting to rebound in places where they dropped when the mortgage stress test took effect at the beginning of 2018, but activity there remains well below levels recorded prior to its introduction,” CREA’s chief economist Gregory Klump said.
The average sale price of a resale home that sold in July was $499,000, a figure that has risen by 3.9 per cent in the past year. CREA says the average figure can be misleading because it tends to be skewed by activity in big, expensive cities. So they say another number, the House Price Index (HPI), is a better gauge of the market because it adjusts for the size of the market and the type of housing.
The HPI rose by 0.2 per cent on an annual basis in July. That’s the first uptick since January.
Eleven of the 18 housing markets tracked by the index were higher, especially in central and eastern Canada.
The Greater Vancouver and Fraser Valley areas were down by 9.4 and 6.7 per cent, respectively, in the past year. Despite the price decline, the sales figure rose by 26 per cent during the month. “Gains in Vancouver push the market back toward balanced market territory, suggesting the city is through the worst in terms of price declines,” Toronto-Dominion Bank economist James Marple said of Vancouver’s data.
City by city breakdown
The index fell by 3.5 in Calgary, 3.2 per cent in Edmonton, 4.4 per cent in Regina and 1.3 per cent in Saskatoon in the past year. In all four of those places, the index is lower today than it was five years ago. Everywhere else in Canada, the index has risen by between 20 and 80 per cent over that time period.
“The home pricing environment will likely remain weak in these cities until demand and supply return to better balance,” CREA said.
Ontario saw solid gains, including:
- Guelph (up 6.9 per cent).
- The Niagara Region (up 5.9 per cent).
- Ottawa (up 8.9 per cent).
- Hamilton-Burlington (up 5 per cent).
- Oakville-Milton ( up 5 per cent).
- The GTA (up 4.4 per cent).
- Barrie (down 1.3 per cent).
Moving east, Montreal’s HPI rose by 7.23 per cent in the past year while Moncton’s was up by 2.21 per cent.
“This can only be described as a solid month for the Canadian housing market,” Marple said. “As they have in the past, strong population growth, solid job growth and lower mortgage rates appear to be doing the job of supporting Canadian housing demand.”
“The immediate downside risk to home prices have diminished considerably,” he added. “While affordability will remain a constraint in major high-priced markets, prices appear more likely to increase than decrease over the next year.”