Canadian home sales fell 3.1 per cent month-over-month in August 2016, making it the fourth consecutive month of sales declines, according to the Canadian Real Estate Association (CREA). This marks the largest monthly decline since December 2014.
Including the three previous months’ declines, the slowdown in August finds national home sales activity 6.9 per cent lower than the record set in April 2016. This is consistent across about 60 per cent of regional markets in August, led by a sharp decline in Greater Vancouver following the introduction of the property transfer tax on homes purchased by foreign buyers.
“The sudden introduction of the new property transfer tax on homes purchased by foreign buyers in Metro Vancouver has created a cloud of uncertainty among home buyers and sellers,” said Cliff Iverson, CREA president, in a press release. “That the tax applies to sales that had not yet closed shows how the details for a new tax policy can unnecessarily destabilize housing markets. More broadly, it speaks to the importance of evidence-based decision making to ensure that unintended consequences and collateral damage are minimized when new policies or tighter regulations affecting housing markets are being actively considered.”
“Single family homes sales were already cooling before the new land transfer tax on foreign home buyers in Metro Vancouver came into effect,” added CREA chief economist Gregory Klump. “The surprise announcement of the new tax caused sales to brake hard.”
Actual (not seasonally adjusted) sales activity increased 10.2 per cent year-over-year in August 2016, with sales up compared to one year ago in about three quarters of Canadian markets, led by Greater Toronto, while Greater Vancouver posted the largest year-over-year sales decline.
The number of newly listed homes fell 2.7 per cent in August 2016 compared to one month before. While new supply had fallen in just over half of all local markets, declining numbers in the Lower Mainland, Greater Toronto and Montreal regions far outweighed the monthly rise in new listings in less active markets.
The national sales-to-new listings ratio was 61.6 per cent in August 2016, indicating a sellers’ market. This level remains relatively unchanged month-to-month.
The Aggregate Composite MLS HPI increased by 14.7 per cent year-over-year in August 2016, the biggest gain seen since October 2006. For the seventh consecutive month, year-over-year price growth increased across all property types tracked by the index.
Two-storey single family home prices increased 16.3 per cent year-over-year in August 2016, as did townhouse/row units. One-storey single family homes posted a price increase of 14.4 per cent year-over-year, while apartment unit prices increased 11.7 per cent.
The actual (not seasonally adjusted) national average home price in August 2016 was $456,722, a 5.4 per cent increase year-over-year, making it the smallest price increase since January 2015.
The national average price continues to be higher as a result of sales activity in Greater Vancouver and Greater Toronto, but when excluding those regions, the average price of a home sits at $357,033.