September sales slowdown; the year’s first decline
Despite a positive year-over-year result, national home sales were down in September; the first monthly decline since January. New figures from the Canadian Real Estate Board show that nationally in September there was a drop of 1.4 per cent from the previous month.
There were declines in 60 per cent of markets led by Calgary, Edmonton, Central Toronto, Kitchener-Waterloo, London & St. Thomas, Windsor-Essex, and Ottawa. There were increases in Fraser Valley, Vancouver Island, the Okanagan region, Mississauga, Durham and York regions of the Greater Toronto Area, Sherbrooke, and the Northern region of Nova Scotia.
Lower supply is one of the main factors in the slowdown in activity, with a 1.6 per cent drop in new listings in September, but high prices are also starting to bite. CREA president Beth Crosbie commented: “Affordably priced single family homes are in short supply in some of Canada’s hottest housing markets, which contributed to the monthly decline in national sales activity in September.”
House prices may be moderating says Royal Le Page
The rise in house prices has begun to ease according to the latest survey from Royal Le Page. The figures show that house prices increased year-over-year up to the third quarter of this year. Condos were at the bottom end of the scale up 4.4 per cent to an average $257,377; standard two-storey homes were up 5.5 per cent to $441,714; detached bungalows climbed 6.1 per cent to an average $405,101. Toronto and Calgary have led the increases but Phil Soper, president and chief executive of Royal LePage says things are balancing out: “We are now experiencing a natural slowing in the rate of year-over-year price appreciation, with real estate markets moderating in most parts of the country, a transition to what our agents refer to as a ‘Goldilocks market,’ one that is neither too hot, nor too cold. To be clear, we expect home prices to continue to grow in the months ahead, but at a slower rate than we have seen in recent years.”
Homeowners are paying down mortgages faster
A new report from CIBC World Markets suggests that Canada’s homeowners are paying down their mortgages faster than thought. With low interest rates an estimated 30 to 40 per cent of those with home loans are accelerating their payments. CIBC’s chief economist Benjamin Tal says that with a large number of households carrying smaller debt than official figures show, their exposure to interest rate rises is lessened meaning the housing market will be more resilient to increases. Read the full story.