Property prices up 9.6% year on year in Canada, sales up 11%

Average residential property prices in Canada were 9.6% higher year on year in June while sales activity is up 11% compared to a year ago, the latest index data shows.

On a monthly basis national homes sales edged back, however, down 0.8% from May to June, according to the index from the Canadian Real Estate Association (CREA).

But sales levels in May and June marked the strongest monthly readings in more than five years and June sales were up from the previous month in about half of all local markets, led by increases in Hamilton-Burlington and in the Durham Region of the Greater Toronto Area.

And average prices are being pulled up by growth in Greater Vancouver and Greater Toronto. Without these two locations then year on year growth is just 3.1%. Also, the monthly increase in sales there was offset by monthly sales declines in Ottawa and Montreal.

The actual, not seasonally adjusted, national average price for homes sold in June 2015 was $453,560 but excluding Greater Vancouver and Greater Toronto it was a more modest $346,904.

Low interest rates are helping boost consumer confidence and home sales activity this summer, according to CREA president Pauline Aunger. But she added that low interest rates are benefiting sales in some areas more than others. All real estate is local, with trends affected by a combination of local and national factors.

Gregory Klump, CREA's chief economist, explained that records sales prices in Greater Toronto would be even higher were it not for an ongoing shortage of listings for single family homes in the area. ‘The combination of strong demand and a shortage of listings is continuing to fuel single family home price increases,’ he added.

The number of newly listed homes for sale was little changed, down a marginal 0.2% in June compared to May, marking the third consecutive month in which they remained stable. There was roughly an even split between the number of local markets showing an increase in new listings and those showing a decline.

The national sales to new listings ratio was 57.2% in June. Although little changed from its reading the previous month, it is up from the low of 50.4% in January when it reached its most balanced point since March 2013. The ratio has risen steadily along with sales over the first half of the year while new supply has remained stable.

A sales to new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers' and buyers' markets respectively.