“Rapid growth in mortgages fuelled a continuing rise in household debt,” the company said in its report. “Mortgage terms were tightened, however, a few years ago, which appears to have had the desired effect as house price increases have moderated in the last three years. It may be that Canada’s housing market has achieved the elusive soft landing.”
That news, however, will likely surprise some agents who sounded the alarm over CREA’s September sales data, which reported a 1.4 per cent drop in seasonally adjusted month-over-month sales in September.
“Low mortgage interest rates have been key to supporting home sales activity and prices,” says Gregory Klump, CREA’s chief economist. “Interest rates are likely to remain low well into next year, which is supportive for home sales activity and prices.”
Unadjusted sales for all property types rose 10.6 per cent year-over-year to 42,151 units, led by significant gains in British Columbia, Saskatchewan, New Brunswick and Prince Edward Island. New listings rose eight per cent, thanks to growth in the Maritime provinces, while the average price increased almost six per cent over 2013, to $408,795.
That price hike, in particular, will interest analysts. The Credit Suisse report stated that Canadians are better able to afford higher-priced homes. Since 2000, household wealth grew at an annual rate of 7.1 per cent.
The verdict may be in: a new report by global financial giant Credit Suisse suggests Canada has already avoided the kind of severe market correction many agents continue to worry about.