According to recent statistics from the Canadian Real Estate Association (CREA), national home sales recovered slightly in September 2016 compared to August.
The number of homes sold via Canadian MLS Systems was up 0.8 per cent month-over-month in September 2016. Since sales have been falling over the past four months, national home sales in September were 5.6 per cent lower than the record set in April 2016.
Continuing recent trends, sales climbed further in and around the Greater Toronto Area (GTA), while they fell further in and around the Lower Mainland of British Columbia. Much of the decline since April 2016’s national sales peak reflects the rapidly falling activity in and around the Lower Mainland of B.C.
“The Finance Minister’s recent changes to regulations affecting mortgage lending has added to housing market uncertainty among buyers and sellers,” said Cliff Iverson, CREA president, in a press release. “For first-time home buyers, the stress test for those who need mortgage default insurance will cause them to rethink how much home they can afford to buy.”
“First-time home buyers, particularly in housing markets with a lack of affordable inventory of single family homes, may be priced out of the market by the new regulations that take effect on October 17th,” added Gregory Klump, CREA chief economist. “First-time home buyers support a cascade of other homes changing hands, making them the linchpin of the housing market. The federal government will no doubt want to monitor the effect of new regulations on the many varied housing markets across Canada and on the economy, particularly given the uncertain outlook for other private sector engines of economic growth.”
Actual (not seasonally adjusted) activity in September climbed 4.2 per cent year-over-year. The number of transactions were up from one year ago in almost two-thirds of all Canadian markets, led by the GTA region.
The number of newly-listed homes grew by 0.5 per cent in September 2016 compared to August. Meanwhile, the sales-to-new listings ratio sat at 62.1 per cent, only 0.2 per cent higher than it was in August. This ratio indicates a sellers’ market.
The Aggregate Composite MLS Home Price Index increased 14.4 per cent year-over-year in September 2016, down from August’s 14.7 per cent. This is the first time the MLS HPI has fallen since March 2015.
In townhouses and two-storey single family homes, year-over-year price growth was highest, at 16.4 and 16.3 per cent, respectively. In single-storey single-family homes, price growth was still significant at 14 per cent, while apartment units had the slowest growth at 11.1 per cent.
Home prices showed year-over-year increases in 9 out of the 11 markets tracked by the MLS HPI. The actual (not seasonally adjusted) national average price for homes sold in September increased 9.5 per cent year-over-year to $474,590.
The national average home price reflects sales activity in Greater Vancouver and Greater Toronto, which are two of the country’s tightest, most active and expensive housing markets.
However, since new rules on foreign ownership have been put into place in B.C., Greater Vancouver’s share of national sales activity has fallen recently, causing it to provide less of an impact on the national average price. However, when removing Greater Vancouver and Greater Toronto areas from calculations, the average price drops to $358,884.