Sales in Canada boosted in November by surge of activity in Greater Toronto

Activity has improved in the property market in Canada with sales up 3.9% month on month in November and average prices up 2.9% year on year, the latest index shows.

Sales have now increased for four months in a row, led by a jump of 16% in the Greater Toronto area, according to the data from the Canadian Real Estate Association (CREA).

Indeed, the surge in sales in Toronto accounted for more than two thirds of the national increase and overall activity in November was a little over halfway between the peak recorded in March 2017 and the low reached in July.

Nationally actual activity rose 2.6% year on year, a new record for the month of November and the first annual increase since March and was unassisted by the GTA, where activity remains down significantly from year ago levels.

A number of other large markets recorded year on year activity gains, including Greater Vancouver and the Fraser Valley, Calgary, Edmonton, Ottawa and Montreal.

According to CREA president Andrew Peck some home buyers with more than a 20% down payment may be fast tracking their purchase decision in order to beat the tougher mortgage qualifications test coming into effect next year.

‘Evidence of this is mixed and depends on the housing market. It will be interesting to see whether December sales show further signs of home purchases being fast tracked,’ he said.

It remains to be seen whether stronger momentum now will mean weaker activity early next year once new mortgage regulations take effect beginning on 01 January 2018, according to Gregory Klump, CREA chief economist.

The national average price for homes sold in November 2017 was just under $504,000, up 2.9% from one year earlier. The national average price is heavily skewed by sales in Greater Vancouver and Greater Toronto, two of Canada’s most active and expensive markets.

Excluding these two markets from calculations trims more than $120,000 from the national average price, taking it to just above $381,000.

The index data also shows that the number of newly listed homes rose 3.5% in November, which reflected a large increase in new supply across the GTA.

With sales and new listings having risen by similar magnitudes, the national sales-to-new listings ratio was 56.4% in November, remaining little changed from 56.2% reported in October. A national sales-to-new listings ratio of between 40% and 60% is generally consistent with a balanced national housing market, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

Based on a comparison of the sales to new listings ratio with its long-term average, more than half of all local markets were in balanced market territory in November 2017.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to liquidate current inventories at the current rate of sales activity.

There were 4.8 months of inventory on a national basis at the end of November 2017, down slightly from 4.9 months in October and around five months recorded over the summer months, and within close reach of the long term average of 5.2 months.

At 2.4 months, the number of months of inventory in the Greater Golden Horseshoe region is up sharply from the all-time low of 0.8 months reached in February and March. Even so, it remains below the region’s long term average of 3.1 months.