Housing market in Canada is cooling with sales down substantially year on year

Home sales in Canada fell nationally by 1.7% in April month on month with activity down 7.5% from a year ago as the housing market cools , the latest index data shows.

The fall in activity comes as more homes are being put on the market with the figures from the Canadian Real Estate Association showing that listings increased by 10% from March to April.

The national average price is now 10.4% higher than it was in April 2017 but there are considerable regional variations in price growth. After having dipped in the second half of last year, home prices in the Lower Mainland of British Columbia have been recovering and are up from a year ago with rises of 11.4% in Greater Vancouver and 18% in Fraser Valley.

Prices increased by 20% year on year in Victoria and elsewhere on Vancouver Island along with Guelph, and were up around 30% in Greater Toronto and Oakville-Milton but prices fell by 0.9% in Calgary and by 2.6% in Saskatoon and are now about 5.5% below their peaks reached in 2015.

Sales were down from the previous month in almost two thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.
Year on year activity was down in 70% of all local markets.

Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last year’s record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.

‘Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close. Meanwhile, sales are up in Calgary and Edmonton from last year’s lows and trending higher in Ottawa and Montreal,’ said CREA president Andrew Peck.

Home buyers and sellers both reacted to the recent Ontario Government policy announcement aimed at cooling housing markets in and around Toronto, according to Gregory Klump, CREA’s chief economist.

He pointed out that the number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only a few days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month.

‘It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers,’ Klump explained.

The number of newly listed homes jumped 10% in April 2017, led overwhelmingly by a 36% increase in the GTA. Housing markets in the Greater Golden Horseshoe also saw similar percentage increases. The jump in new listings and drop in sales eased the national sales to new listings ratio to 60.1% in April compared to 67.3% in March.

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

The ratio was above 60% in just over half of all local housing markets in April, mostly in British Columbia and southwestern Ontario. The GTA downshifted into the middle of the balanced range in April, while Greater Vancouver and the Fraser Valley have returned to sellers’ market territory.