Canada’s two most expensive housing markets have moved in various directions over the last year, leaving average domestic sales with a look of comparative stability that pushes sharp regional differences.
Greater Toronto Area home sales dropped 27 percent in October compared with a year earlier, while Greater Vancouver saw home sales climb 35 percent in October on an yearly basis, according to data released Wednesday by the Canadian Real Estate Association.
That wide gulf between the two cities intended home sales dropped a modest 4.3 percent in October on a nationwide basis, marking the seventh consecutive month that sales have dropped in Canada.
Sales fell in over half of all regional markets in Canada, “led overwhelmingly by the GTA and neighboring cities,” CREA stated.
Besides large sales declines in a number of cities surrounding Toronto, home sales also dropped by more than 10 percent in October in Victoria, Calgary and Winnipeg in comparison to a year earlier, CREA stated.
On a nationwide basis, costs also showed virtually no change in October, falling only 0.04 percent from September, according to an aggregate of 14 big markets, CREA stated.
However, home prices rose 0.48 percent in Greater Vancouver in October compared with September, depending on the MLS housing price index benchmark cost, while prices fell 0.4 percent in Greater Toronto compared with September.
Home prices slid in Vancouver following a new foreign purchaser’s tax was released in August, 2016, but recovered from early 2017 and have continued to climb. In the Toronto area, however, prices started to fall sharply in May following the Ontario government announced a package of reforms in April to cool an overheated housing market, and just started to recover slightly in September.
House prices were up 9.7 percent in October nationwide from a year before, CREA said, that’s the smallest year-over-year growth since March.
Bank of Montreal chief economist Douglas Porter said cities around Toronto which were covered by the new home measures announced in April saw home sales fall nearly 24 percent on average in October compared with a year earlier, while the remainder of Ontario posted a much smaller earnings decline of just 5 percent.
Toronto prices are down 8 percent from their peak in April, depending on the MLS benchmark cost. Mr. Porter said detached home prices are down 10.7 percent since April and are still decreasing, while condominium prices “have completely stabilized.”
On a nationwide basis, Mr. Porter stated he expects total home sales will fall 3 percent in 2018 after falling about 5 percent in 2017, while the MLS housing price index will climb between 1 per cent and 2 per cent per year after increasing roughly 14 percent this year.
Bank of Nova Scotia economist Adrienne Warren said domestic house sales activity is showing signs of recovery going to the year-end, headed by a pickup in activity in Toronto and other markets in the Greater Golden Horseshoe area.
Sales climbed 2.5 percent in the Greater Toronto Area in October over September on a seasonally adjusted basis. Sales were up 9 percent in the Niagara area, and 6.6 percent in the Hamilton-Burlington region.
Ms. Warren said sellers at the Toronto area are becoming more optimistic about listing their houses, and a yield of more balance between listings and sales expansion is helping to stabilize prices in the area.
“While earnings in the area remain well below their previous peaks, buyer nervousness following Ontario’s spring policy changes has eased,” she said in a research note.
CREA chief economist Gregory Klump said earnings momentum has begun to regain this fall, but said it may slow with the introduction of tougher new mortgage stress-testing rules, which come into effect on Jan. 1.
“It remains to be seen whether that momentum can continue once the newly declared stress test takes effect beginning on New Year’s Day,” Mr. Klump said in a statement. “The stress test was made to curtail growth in mortgage debt. If it works as planned, Canadian economic growth could slow by more than anticipated.”
Courtesy: The Globe And Mail